Dennis Allison on backing British growth and why it pays for UK food producers to automate
The UK manufacturing sector may be on track with automation but when it comes to the packing side, we lag behind many of our European counterparts. To keep up with competitors overseas, and ensure we don’t miss critical business opportunities, automation is inevitable according to our columnist. In recent weeks we’ve seen the supermarkets unveil their Christmas trading reports. Some fared better than others. The majority drew attention to an uncertain trading environment, food price deflation and price reductions. While the supermarket price wars might spell good news for shoppers, it’s the food suppliers that often end up paying the price. In 2014, around 150 food producers entered insolvency. For many, the price squeezes may have been the tipping point. What’s more, this figure, doesn’t take into account the number of UK sole traders or simple partnerships that may have folded.
On the back of these announcements, Sainsbury’s says it’s cutting prices on 1,000 popular products. Asda has unveiled similar plans, saying it will invest £300m into price cuts in quarter 1 of 2015 and I expect most food retailers to follow suit. Price seems now to be the only point of difference. This means margins will be squeezed tighter, which will undoubtedly impact buying practices and consequently food suppliers. Automation can help food producers and contract packers to avoid falling behind competitors, missing critical business opportunities or losing industry influence. Aside from driving costs down, automating manufacturing processes improves quality, reduces waste and optimises energy use.
In a relatively high cost economy, like the UK, automation will consequently increase a manufacturer’s competitive edge. falling behind While manufacturing processes in the UK food industry are fairly well automated (palletising for example is approximately 60% automated) the more labour-intensive packing element at 10% is not. As a nation, we lag way behind our European neighbours, as well as Asia and emerging markets. My view, shared by many industry colleagues, is some countries are just more comfortable with automation. Take Germany as an example; for every one robot sold in the UK, it’s estimated that 10 are sold in Germany. However, an increasing number of UK manufacturers are waking up to the cost and service benefit of investing in automation.
As testament, 75% of all enquiries Pacepacker received in the last 12 months requested a robotic solution, compared to 35% in 2013. Plus, in the last six months we have quoted for 110+ robot food-oriented projects. The more efficient a business is, the more opportunities this presents. Even with the price squeezes, automation can enhance product quality and increase throughput. What’s more, a well thought out turnkey line or robotics solution can start paying its own way in as little as 12 months. multi-functional equipment An emerging requirement is for multi-functional and flexible equipment that can easily be reconfigured.
This is driven by ever-changing consumer tastes and pack variations. There’s a definite shift from single use systems built for a specific application to perform a set task, to robotics, which can easily be reprogrammed and redeployed to do a different job. Naturally, the impending election creates some uncertainly. Some believe investment in UK manufacturing may stall. I do hope not. Last year was a real turning point, evidenced by the recent EEF/Aldermore research report. Our UK economy expanded at a good pace through 2014 and manufacturing grew by 3.5%, its strongest growth rate since 2010. This survey suggests that growth in 2015 will be at a more moderate pace, more likely through efficiency improvements, leading to lower costs. Another worry for many is finances and being exposed to fluctuating exchange rates.
Even if you aren’t trading internationally, the value of the pound can affect the cost of imports. In times like these, partnering, where possible, with local suppliers of components is just one way that we can better control quality and costs, which can be passed onto customers. An ethos we share at Pacepacker. One thing is for sure, investment in UK automation will continue to play a huge part in making production facilities more efficient.
For the food sector, the big question is not “can I afford to automate?” but “can I afford not to?”
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