10 September 2015
A consultation paper revealed in Parliament yesterday shows that engineering companies in the UK can benefit from a global market for engineering services worth £1 trillion by 2025, but must take action now in order to take advantage.
A consultation paper revealed in Parliament yesterday shows that engineering companies in the UK can benefit from a global market for engineering services worth £1 trillion by 2025, but must take action now in order to take advantage.
A national initiative to define ways that the UK can capitalise on this global business opportunity was debated at the Houses of Parliament conference attended by some of the UK’s leading engineering companies including Rolls-Royce, Bombardier Transportation, BAE Systems, Babcock International as well as the UK Ministry of Defence. All of these organisations supported a form of national strategy in through-life engineering services (TES).
The research paper published by the EPSRC Centre in Through-life Engineering Services debated at the House of Commons event shows that TES is strategically important to the UK with a domestic market worth from £30 billion to £40 billion annually over the next few years.
With big aerospace and defence industries, the UK already has world-leading expertise in TES, which improves longevity and operability of complex assets and creates services from products such as aerospace engines and trains. But to date it has only a five per cent share of a global market approaching at least £1,000 billion by 2025, the report says.
Engineering services provide high value jobs with wages averaging £42,000 per year, some 50% higher than the manufacturing industry average. There are around 6,000 companies engaged in these support industries, employing some 107,000 people in the UK.
The report shows these services can save companies millions of pounds in maintenance costs and support industrial sustainability by reducing waste. They promote UK supply chain development as well as creating new revenues from services, with some manufacturing companies already generating over half of their income from services.
Some of the big organisations involved in TES have proprietary models that help spread the cost of expensive, complex products over time and provide the customer with constant availability. These “product service systems” are becoming a pervasive manufacturing and engineering business model worldwide as customers seek to de-risk their expensive purchases and improve their assets’ maintenance and lifespan.
Some of the UK’s leading manufacturers agree that more cross-industry collaboration is needed to maintain and grow the UK’s share.
“Collaborative development of capability in through-life engineering services will be key to future success in a world where technical innovation is demanded in both products and services,” said Dave Benbow, Head of Engineering for Services at Rolls-Royce.
The initiative will be co-chaired by aero-engine company Rolls-Royce and the High-Value Manufacturing Catapult, the public-private funded technology innovation network. It will be supported by many of those companies that use product-service models during a consultation period that has led to the consultation paper, “Making Things Work: Engineering for life – developing a strategic vision”.
“The value in high value manufacturing is increasingly in the provision of services surrounding the product. There are big opportunities for the UK to exploit new value streams with the guidance provided from a national strategy,” said Dick Elsy, chief executive of the High Value Manufacturing Catapult.
The paper calls for a collaborative national approach to engineering services to improve engineering and manufacturing productivity, innovation and competitiveness. The conference showed that these large OEM companies, such as BAE Systems, are engaged with mid-sized and smaller companies to develop strength in depth across the engineering services’ supply chain, and wish to develop these links further to realise efficiency savings.
Senior engineering personnel attending the conference maintained that developing the engineering services skills base will provide value to the wider UK economy by more effectively manufacturing and maintaining long-life, high value products, assets and infrastructure, as well as raising national productivity by increasing high-value employment.
A national, strategic approach to engineering services is expected to be developed by late-2016. It will aim to deliver performance improvements in these services over the following three to four years. Development of new formal standards to assist in understanding and sharing best practice in the field will be a key element. The British Standards Institution (BSI) will be supporting the initiative and expects to hold an initial conference in February 2016 to address the scope of new “framework” standards.
The consultation has been sponsored by the senior industrial partners of the EPSRC Centre for Innovative Manufacturing in Through-life Engineering Service (TES), which are Rolls-Royce, BAE Systems, Bombardier Transportation and Babcock International, with the support of many other organisations including the government.
“There is presently no clear national focus for through-life engineering services, without which we will lose sight of the opportunities that others will exploit,” said Professor Rajkumar Roy, TES Centre Director at Cranfield University. “Industry and government need to do more to change their thinking to capture more value from TES.”
“We are delighted that Rolls-Royce and the HVM Catapult are planning to co-chair this consultation, which underscores its strategic importance to the UK,” he added.