Knowing what impact Brexit could have on the British economy is still unknown. Regardless of your vote in the referendum or how the UK decides to move forward over the coming months when it comes to trade negotiations, the impact of the decision and its implementation will have a substantial impact on generations to come. Only recently have we seen a slowdown of reporting on this topic, due to the Covid-19 pandemic. One area with little mention in all debates I have seen is the impact Brexit will have on manufacturing.
A Dwindling Currency
The impact of the UK’s weakening pound is causing a huge effect on the supply chain of manufacturers in the UK. For a country that imports most of its component parts this is a significant added pressure to profitability.
Where an electronics manufacturer is selling to the international market the situation is a much rosier one. Let’s look at an aero/military subcontractor across 2019. America and incredibly large spend on their military capabilities sees a weakening pound against the dollar. This in turn offers them a huge discount on products, allowing them to effectively buy quantities for the same value.
Alongside a discount on expensive aero/military production, it has a wider effect against our cheaper Eastern European competitors as arguably some of the highest quality electronic manufacturing facilities in Europe all went into the reduced section. The question for those seeking manufacturing services or to base a location, is whether the UK is, and could be, a more attractive proposition in the future with positives including the UK’s laws, language and quality etc.
Eastern Europe is a big hurdle we will need to overcome with the significant impact of the currency shift on staff availability as the UK’s highly skilled pool of foreign employees move away. We are seeing that many workers are considering or have already returned home. Perhaps people are unaware, but when the crash happened previously, UK engineering saw a domino effect of factory closures, meaning that there were no jobs available in this area. This resulted in fewer UK nationals studying engineering and moving into the sector and a gulf of home-grown talent in the electronics industry and wider manufacturing disciplines in the UK.
At the same time, multinational companies boomed in Eastern Europe where labour was cheaper, readily available and offered training and jobs. These workers became highly skilled and moved to the UK seeking a better wage. It was here that they found work due to a lack of talent and a declining skilled workforce.
The desire to live in the UK has therefore diminished. This can be seen when considering manufacturing in the UK electronics’ industry. It is difficult to find a CEM or OEM that does not have an open vacancy. There is not the pool of skilled personal available, and of those that are residing are demanding higher wages. With the new points-based immigration system, we will need a renewed focus on training talent or a greater focus on factory automation.
Looking on the Bright Side
On the flip side, it is not all negative. Companies are looking at approaches to overcome the challenges of operating in 2019. People are looking to make smart investments to mitigate against competitive and political risks of recent and future times.
Clearly, the first and largest demand when staff numbers are not available is a drive to significant automation. Companies that have island machines for SMT are finally taking the crucial step to form an automated process. Firms that have large manual soldering and placement requirements for mature products are investing in odd form placement alongside selective soldering or robotic soldering. Companies with difficulty managing component handling are investing in smart retrieval systems and automatic communication capabilities. The uplift in final assembly, testbed and routing solutions also more than speaks for itself. What Altus has seen from Brexit so far, is an increase in the pace to achieve the ‘lights out factory of the future’.
Compensating Through Capital Equipment
The two main processes that are being tackled to compensate for current change are board handling to automate an SMT line and odd form and selective/robotic soldering processes to automate the assembly and soldering of THT products.
When it comes to board handling, companies across the country represent a range of development in SMT. There are many using island style processes and manually handling PCBs between each. There are those in a line but without loaders and unloaders, and there are those that use unloaders and loaders, together with AGV robots to handle full magazine racks on and off the line. For either stage in development, the next level of investment is significant.
Concerning THT and the placement and soldering of products, most manufacturers have hand soldering stations and products going through a manual process. This is hugely expensive for a company and drives up the cost of production with human operator error. Odd form and selective soldering offer an automated placement and soldering process for large quantities of components. This method is highly consistent and reliable and increases production.
In summary, the effect of Brexit has already been costly for many. The situation is still not clear, and the future challenges faced by us all are not either. British business leaders however have and will continue to find solutions to mitigate against these challenges and continue as a leading force in global technology and its future. For now, the answer lies in a fast track to automation and the smart factories of the future of which Altus is at the forefront and ready to assist.