16 September 2010
It's crystal clear that manufacturing needs to be a bigger part of the UK economy. Achieving that requires more focused national resources, GKN's Andy Reynolds-Smith tells Paul Fanning
Few could claim to be better placed to assess the state of UK manufacturing than Andrew Reynolds-Smith. From his position as divisional chief executive of one the UK's most successful manufacturers GKN to his roles as chairman of the CBI Manufacturing Council and member of the Ministerial Advisory Group for manufacturing, his experience gives him an enviable perspective from which to judge the threats and opportunities that face the sector.
To have reached these heights by the age of 44 is impressive, but of course, Reynolds-Smith's position was not always so exalted. He came into engineering via what he calls a "classic apprenticeship route" with Texas Instruments, something he believes gave him an ideal grounding in both the technical and economic challenges posed by a career as an engineer. "I think it was an outstanding foundation for the way I've developed," he says, "and my career has gone forward because it gave me a real appreciation for the grassroots of manufacturing and technology – the real basics of it and how you turn ideas into products and from there turn them into value."
One of the reasons Reynolds-Smith gives for taking the route he did was that the Texas Instruments recruiter painted a vivid picture of the key part that engineering and manufacturing have in shaping the world we live in, something he is keen to get across to young people considering a job in manufacturing. "If you look at how you can contribute to the developing needs of the world around you," he says, "then it's clear how much of it is based on manufactured products – engineering and technology making things possible. If you look at things as wide-ranging as the challenges we have in reducing CO2 emissions or in terms of feeding an ever-increasing population, then it's clear that the solutions are going to lie in engineering and manufactured products. So it really is a tremendous opportunity to affect the way in which the world is developing, which is a pretty great place to be. The other really great thing about it is that it does truly represent something that's truly global in scale. There are engineering opportunities all over the world, so as a career choice, it offers limitless possibilities."
Clearly this is a heartfelt and convincing plea, but the fact remains that, despite this, there is still a severe skills shortage afflicting the engineering industry, something that worries Reynolds-Smith, particularly given the importance he places on his own training. He ascribes much of the problem to outmoded perceptions of the industry and a failure to create a coherent message about the sector and its goals, saying: "I think there's a role to be played here by the manufacturers and engineers themselves in terms of the way they present manufacturing, but I also think there's a need for there to be a clear vision on a national level that says engineering and manufacturing lie at the heart of a balanced economy. And I think we need to have a vision of how we want the economy to look, which in turn encourages that overall view of manufacturing and engineering."
Naturally, the desire for a balanced economy has been expressed by all shades of government for some time now, but asked to define what he understands it to mean in terms of percentages, Reynolds-Smith prefers to look at the bigger picture. "There are endless arguments around how large a percentage of GDP manufacturing should represent," he says, "but what is absolutely crystal clear to me is that today it is simply too small. If you look at the impact that manufacturing and engineering have – not just in terms of direct employment, but also in terms of the extended employment in supporting infrastructure and associated industries – it has an enormous effect on the health and vitality of the economy. More than 50% of our exports are manufactured, technology-based products. So it has a huge impact on our position on the global stage. The drive right now is in ensuring that manufacturing and engineering continue to grow, develop and increase as a share of GDP."
His role with the CBI and the Ministerial Advisory Group give Reynolds-Smith access to the higher echelons of government, but he is keen to state that he does not believe that this is solely a problem to be addressed by government, believing that manufacturers are capable and resilient enough to improve their circumstances if given the right encouragement.
"I think it's very easy to say 'the government needs to solve this problem'," he says, "but manufacturers are smart. If you look at the level of resilience during difficult times – particularly over the last couple of years – it's clear that our manufacturing sector has remained strong. It's improved all of its processes and it's improved itself significantly in terms of its competitive advantages. So manufacturers aren't sitting there asking for someone else to solve their problems."
Where he believes government does have a role to play is in creating an environment conducive to long-term manufacturing success. He says: "You can't underestimate the value of a clear national vision and ambition for the sector. That really is key for me. You can establish the key fundamentals around skills, regulatory environment, technology focus, but without a context, it's extremely difficult to make decisions on an ongoing basis that really gets to the nub of the issue… I think it's a joint responsibility between business itself and government.
The role that government needs to play is in setting the vision and ambition for the shape of engineering and manufacturing as part of the economy, because that in turn drives policy making and decision making and ensures that the processes are in place on a national level to really develop and leverage the capabilities."
To achieve this, he advocates an approach based on more centralised support for manufacturing rather than the localised approach previously represented by regional development agencies: "I think it's less about central command and control and more about a centralised approach that brings to bear a greater level of national resources than a more localised approach. I think a good example is the composites strategy, where it was clearly established that we want the UK to be a world leader initially in aerospace composites, but now taking that capability to a broader range of industries. Creating that vision has allowed a number of good decisions to flow which have ensured that capability is both retained and developed in the country."
The recession, of course, had a massive impact on all levels of industry, with GKN being no exception. However, the company has posted a pre-tax profit of £175 million for the six months to June this year, a success Reynolds-Smith claims has been based on a clear strategy. "We had a very clear focus for the year to ensure that we would work on the basics of the business. We would improve them to ensure that, as we came through the difficult recessionary period and the markets recovered, the underlying quality of the business was better. So a lot of work went into the operational structure and into the way that we develop our technical capabilities – and particularly not taking our eye off the need to continually increase business wins. It's about pulling all three levers at once: winning new business, technology and having the best operational manufacturing capability. We're very pleased with the results."
Of course, GKN has benefited from the fact that its key markets of aerospace and automotive have recovered significantly. In the aerospace sector, global air traffic and airline profitability are up and lease financing has returned, while the worldwide growth in car sales has also helped to underpin order books for the company.
While things have certainly improved, threats still loom. Clearly, defence spending cuts are likely to have an impact on the company, which is heavily involved in the sector, while long-term uncertainties about the macro-economic conditions also pose a problem. However, while Reynolds-Smith acknowledges that no company can exist independently from the markets it serves, he believes that, with the right structures in place, it is possible for a company to minimise such risks. "Our aim as a business is to ensure that we're ahead of the markets we serve. And the only way you get to do that is to be the best operationally, but also to be differentiated technically by having the best products and processes. I think that understanding of technical differentiation and the value that it brings insulates you to some extent from the market and the competitive environment."
This emphasis on the importance of technical differentiation by the processes employed is exemplified, he believes, by the composite wing spar that GKN is currently developing for the Airbus A350 programme. He says: "There's a great example of a product that is lightweight and very high-performance and which meets the developing needs of fuel efficient aircraft of the future. But the key to it is how you make it: the automatic tape-laying that ensures absolute repeatability and quality in the volumes that are needed, for instance. I think that's a very good example of the capability that's now being developed in the UK that can make a difference."
Overall, then, Reynolds-Smith seems optimistic, both about GKN and the UK manufacturing sector in general. While acknowledging the importance of addressing key issues such as skills, he is keen to emphasise the strength of UK manufacturers rather than any perceived weakness. On the recession, he says: "It was a very tough period, but I think for UK manufacturers it wasn't the first time they'd faced hard times. You're talking about a very battle-hardened group of people who understand the challenges and understand that those challenges change continuously. The base that has been built is very strong and resilient and gives us a very strong position from which to move forward as the demands of the market change. For me it's all about having the pace and agility to adapt as those changes take place… When I meet with other business leaders, I'm feeling optimism, passion and enthusiasm for where we are. I don't think there's any introspective thinking going on."
For himself, Reynolds-Smith remains passionate about the value and role of engineering in the modern world; a passion that has not dimmed as the seniority of his roles has increased. "It's impossible to forget that [engineering] is at the heart of everything we do. The fact that I'm not sitting at a computer designing products does not take away from the passion that I've got for the stuff that we make and the way we make it," he says. "That's what motivates me. It's something that I love because I can see the difference that it makes."
Andy Reynolds-Smith joined GKN in 2002 as managing director operations – Europe for the group's Driveline division. In 2004 he became chief executive of GKN Sinter Metals, joined the executive committee in January 2006 and became chief executive Powder Metallurgy, OffHighway and Industrial Services in June 2007. Prior to GKN, he held various general management and functional positions at Ingersoll Rand, Siebe (now Invensys) and Delphi Automotive Systems. He is also chairman of the CBI Manufacturing Council and a member of the Ministerial Advisory Group for manufacturing.
This material is protected by Findlay Media copyright
One-off usage is permitted but bulk copying is not.
For multiple copies contact the