From an SME and a slag heap, to the jewel in the crown

03 June 2019

The cluster of global companies and their supply chains taking shape around the Advanced Manufacturing Research Centre (AMRC) in Rotherham outperforms other similar parks in the country and has the highest share of advanced manufacturing jobs of any in the UK, according to a new report by the Centre for Cities.  

The Parks and Innovation report found that 66% of all the jobs on the fast expanding Advanced Manufacturing Park (AMP) in South Yorkshire are in high-value added manufacturing, compared to 4% in the UK as a whole.

The report was launched in London by the Centre for Cities’ Director, Andrew Carter along with former Innovation Minister, Lord Sainsbury; the Deputy Director of Strategy at UKRI, Alex Marsh; and AMRC Executive Dean, Professor Keith Ridgway.

Addressing an invited audience of national and regional policy makers, Andrew said the report showed clearly that the AMRC is a ‘nationally significant innovation asset.’ Although it is located in the Sheffield city region, he added that: “Its impact and influence extends well beyond the city region. The reach of the AMRC raises important issues about how we support it, and invest in its future – what should be the balance between national government and agencies such Innovate UK and local government, LEPs and universities?”

Anthony Breach, author of the report, opened the event with a rapid run-through of its findings. The cluster of high-value companies in the Advanced Manufacturing Park (AMP) ‘outperforms other similar parks around the country and has the highest share of advanced manufacturing jobs compared to similar industrial estates in other parts of the UK’.

He also noted that the R&D carried out on the park benefited not just the local firms and workers but was also ‘exported’ to other parts of country, citing the AMRC’s work with Rolls- Royce in de-risking a £100m investment in its North East fan disc plant securing 300 high valued added jobs, and its ongoing work with Airbus in North Wales to secure the future of wing production in the UK and 6,000 highly skilled, high-value added jobs in the region.

“This creates a bit of a puzzle for the local industrial strategy,” Anthony added. “We can see that the AMP is a concentration of highly skilled, highly productive advanced manufacturing work that is different and distinct from the existing industrial base but that many of its benefits flow outwards well beyond the city region.

The AMRC is a locally-based national asset whose benefits are diffused across the entire national economy which means the national government should help support as many advanced manufacturing firms across the country to participate in the R&D outputs produced in Sheffield.

“The AMP is a rare concentration of highly skilled work, with a great amount of knowledge production that can only be accessed on that site. Places like Sunderland and Broughton are engaging with Sheffield City Region to access the knowledge and research that is only being created around the AMRC. This shows the importance of place to the successful delivery of the Industrial Strategy.

“It is a key part of the transformation of the region from one where the competitive advantages of the local economy are cheap land and cheap labour, to one where the competitive advantage of the Sheffield City Region is high value knowledge and the ability to produce exports.

“This means that the AMRC is a locally-based national asset whose benefits are diffused across the entire national economy which means the national government should help support as many advanced manufacturing firms across the country to participate in the R&D outputs produced in Sheffield.

“For local government the implications are a little different. What’s key for them is to ensure that the city region is able to provide the skills, the transport connections and the planning decisions that support Sheffield City Region’s transition from a place of low cost production to one of high value manufacturing based on knowledge production.”

Lord Sainsbury, who secured the first public money to support the idea of the AMRC when he was Science and Innovation Minister in the Labour government, asked the Centre for Cities to look at the AMRC in more detail following a visit he made last year. He was especially impressed by the AMRC Training Centre and the full span of apprenticeship levels covered.

He told the event’s audience that advanced manufacturing was crucial to solving the UK’s productivity challenge. “It is very important to understand that value added per capital varies very significantly by sector and advanced manufacturing is usually a very high value added sector because it is a place where you can use science and technology to create competitive advantage, and that is why it is vitally important to encourage the growth of advanced manufacturing jobs in a region and it has to be a key part or regional policy.”

Lord Sainsbury, founder of the Gatsby Foundation, added: “The Bank of England doesn’t understand that the slowdown in growth in our economy, along with other G7 countries, is not about the long tail of underperforming companies: it’s the result of employment shifting from high value added manufacturing into low value added services.

“Innovation is absolutely key to maintaining high value added jobs in manufacturing which is what the AMRC excels at. It is creating real production efficiencies that enable its partner companies to be high value added. Innovation is critical to creating competitive advantage, that again allows you to have high value added businesses.”

He said recent regional policy was in an ‘appalling mess.’ Policy makers, he argued, ‘don’t seem to understand the nature of our regional economic problem’. “It’s blamed on market failure, lack of enterprise and hard work. But the answer is we just have too many low value added legacy firms in the poorly performing regions and not enough high value added ones.

“To address this, first we need an agreed regional structure. And then we need government to recognise that it has a responsibility to support the diffusion of technology and innovation throughout the economy, which is why the Advanced Manufacturing Research Centre is so important. Diffusion is a real problem and we need to address it.

“This is especially relevant because we are at the start of a revolution in manufacturing commonly called Industry 4.0 which is essentially the digitalisation of manufacturing. This is a hugely significant revolution and will transform manufacturing: if we don’t get into that field in a serious way we are just going to be left behind.

“Belatedly we have the Made Smarter initiative; but it is a bit feeble. It has some technology in it, but not enough on diffusing this technology and also the massive amount of training and skills development that will be required. This is why I think the AMRC should be part of a key national effort, as well as a local effort.”

Asked about the success of the AMRC, Professor Ridgway, said: “Our unique strength was that we knew how to cut aluminium faster than anyone in the world because we knew how to tune machine tools. That was taking a factor of five out of machine times. We are now at the point where Boeing are making gears in Sheffield which used to take two-and-a-quarter hours to manufacture. We now do them in 3.5 minutes.  With that level of improved productivity, you don’t need to offshore to the Far East, because you can do it faster in the UK.

“And we should never underestimate the importance of Boeing. Their influence on us was huge, they were a father figure and a guiding hand to us. They knew we were the best in the world at cutting aluminium, but they were moving to composites and that meant machining a much more difficult material: titanium. From that we developed a composite centre and a world-leading expertise in titanium with the support of Boeing staff embedded in our teams.”

It’s not enough to have a good idea and an evidence base behind it. You need to have a crack team. You need to know about the people you are investing in; you need a core of people with the expertise and the passion and the drive you can then trust, without putting shackles around them, to go and do the right thing to realise the opportunity.

Prof Ridgway said the AMRC’s early development was founded on two key strengths in the region: cutting tool technology and weaving. “When we set up the Composite Centre we knew that the best place to weave carbon fibre would be Lancashire and Yorkshire which have been weaving material for 300 years. Let’s not do cloth, let’s do carbon fibre.

“With the support of the ATI we have just invested in a big Jacquard loom which might have been thought obsolete years ago, but we can use it to weave 3D carbon shapes for high-value aerospace and automotive markets. We then asked, can we assemble these products better? And Boeing again put people in to help us understand the problem and develop R&D projects to find the best solutions. The result is AMRC Factory 2050, a fully reconfigurable research and development facility that is leading the UK in Made Smarter and industrial digitalisation.”

Questions then turned to whether policy makers were looking for a critical mass of expertise in a region before deciding where to invest. UKRI’s Alex Marsh said this was the ‘the killer question and we haven’t bottomed out the answer yet.’ He said that the Strength in Places fund is ‘looking at investments of a certain range that informs the critical mass needed to justify a scale of investment’.

Asked whether there was a critical mass in Sheffield when he approached Lord Sainsbury for funding the AMRC, Prof Ridgway replied: “No. We just had an SME and a slag heap (referring to the former colliery at Orgreave). But we did have Boeing. From that we have built an innovation eco-system where ideas are shared, people transfer across companies, people get together and support one another. I think success comes down to a unique capability and an absolute commitment to innovation.”

Professor Ridgway noted that the Centre for Cities report identified the remarkable rise in the value of land around the AMRC over the last decade. “When the first plot of land was purchased it was offered to us at £1 an acre. Today, prime land around the AMRC is now selling for in excess of £600,000.”

One negative consequence of this is small and medium firms in the region like Technicut, whose then sales director, Adrian Allen, co-founded the AMRC with Professor Ridgway, are being priced off land owned by the university and the private sector. “What we urgently need in the region is a clear strategy of how we develop the Advanced Manufacturing Innovation District and that requires a big shift from seeing things solely from a developer perspective to one that drives the formation of an R&D intensive cluster of high valued added industries.”

When Alex was asked would he have invested in the AMRC almost two decades ago, despite the lack of a cluster, he said: “The AMRC has evolved over time and now it’s the jewel in the crown. Would we have backed it? There’s an important point to be made here about leadership. It’s not enough to have a good idea and an evidence base behind it. You need to have a crack team. You need to know about the people you are investing in; you need a core of people with the expertise and the passion and the drive you can then trust, without putting shackles around them, to go and do the right thing to realise the opportunity.”

In concluding the session, Andrew Carter was clear: “There’s no argument that, when you look at the performance and the impact of the AMRC, this is truly a world class success.” But it is also poses a challenge in the current policy landscape. “When you look at the success of the AMRC you can see it in the region, but also well beyond the region. This raises interesting questions about whose responsibility is it to maintain and develop that success?  What is the role of the local policy maker and the role of the national policy maker in ensuring that we can maintain and build on world-class assets in places like Sheffield City Region? And what needs to be done to induce and encourage more success stories of this type in more places.”

The Parks and Innovation report, along with the discussion that followed its launch, makes a powerful case for greater collaboration and coordination between national and local government, and national and local agencies to ensure that we accelerate and diffuse the innovation outputs of assets like the AMRC for the benefit of the locality in which they based and the country.

A regional launch of the report is being planned.

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