Factories of the future: can small business make the grade?

When Paul Peeters worked as a project director with Philips, the Dutch tech giant, he recalls how his team used to regularly open their warehouse doors to small businesses (SMEs).

“SME needed to use one of our machines, which were too expensive for them to purchase new,” he said. “So, we’d give them a key and they’d come in and use them at night.”

This is the kind of tale the European Commission will welcome as it puzzles over policies for advanced, modern manufacturing while addressing the problem of keeping small business owners in the conversation.

There is no doubt that computer-aided design and simulation, and production processes such as 3D printing, can add a great deal to manufacturing, such as reducing the time and cost of bringing new goods to market.

But as the world enters a new age in which factory floors are being invaded and altered by automation and robotics technology, there is a sense of nervousness for smaller entrepreneurs, as they fret over their place in the value chain.

On Tuesday (10 February), EU policymakers held a workshop in Brussels for industry executives, academics and regional governments to discuss which public schemes could help manufacturing thrive, without subtracting market space for SMEs.

A special task force for advanced manufacturing was set up by the EU last year and will create new funding instruments and competitions for SMEs later this year, based on some of the workshop recommendations.

Publicly funded initiatives

The futuristic robot assembly lines seen in companies like Philips, Apple or Tesla Motors beg the question: is there a role for SMEs in the factories of the future?

In Belgium, Peeters is grafting some of Philips’ ideas into a new scheme that helps SMEs break into the ever-more complex value chain of modern manufacturing. Called the “Made Different” project, launched by the Belgian government and driven by Agoria, the Belgian federation for the technology industry, a team of 20 experts help smaller tech firms identify market challenges and transform into digital factories.

Newtec, a specialist in satellite equipment, Dentsply Implants, 3D printing, and Provan, a welding business, have all successfully exited the project’s auditing process and received recognition as making the ‘future factory” grade.

“Every company that gets the award has to be willing to open its doors to small business,” said Peeters. He hopes the initiative will reward a total of 70 companies in Belgium with the “Factory of the Future” label.

Meanwhile in Wales, Johann Sienz, a professor in Swansea University, runs a similar scheme called the Advanced Sustainable Manufacturing Technologies, or Astute, a €27 million EU-funded project which offers small Welsh manufacturers the opportunity to collaborate with academics and specialised experts.

Cambrian Printers, a firm in Aberystwyth that does glossy printing for customers across the UK, went through the Astute programme and received help with drawing up a feasibility study of a smart phone-based monitoring system that gave them much better control of what is happening in their plant, said Sienz.

The UK government-backed Catapult innovation centre for advanced manufacturing was another model discussed by delegates, and one which EU leaders are monitoring. The Catapult, which combines one-third public money, one-third from business and one-third from collaborative work, was set up to plug the gap between ideas and prototypes, and has worked with around 1,500 companies since it was started in 2011.

Whatever policies EU policymakers decide on, a general request from delegates was that they be easy to follow. “SMEs run from the room screaming when they see the jungle of funding portals out there,” observed Karen Smith, who runs a Cambridge University SME support scheme called PrISMS.

Changing roles and skills

The Commission is likely to put aside some money for a big concern confronting manufacturers everywhere: education and training. There are still a lot of jobs beyond the reach of automation but it is a shortening list: many of the latest technologies will require fewer workers on the factory floor.

The threat of layoffs is not so obvious in all cases though. For many new machines, new talent will be needed to operate them. A lot of manufacturing jobs are becoming more highly skilled and helping people gain the necessary apprenticeships, technical qualifications and degrees is a legitimate role for EU money to play, a lot of workshop delegates said.

Erastos Filos, who works in the European Commission’s directorate for research (DG Research), said that in his long experience fellowship schemes, which allow people to move between different industries and institutions, was one of the most effective ways of spending money.

More private money needed

Is there an overall risk that pumping more public money into manufacturing will keep out private investment? Sienz doesn’t think so. “Without our initiative, [small business owners] would have fallen out of the supply chain,” he told delegates.

But extra finance, from banks with an expertise in financing manufacturing, especially advanced manufacturing and start-ups, is desperately needed, the workshop heard. “Banks aren’t really aware of the rate of return on some of these new machines,” said one delegate, who hinted that the Commission could play a bigger role in creating guarantee schemes for money loans for small businesses.  

Smith said that participation in public initiatives will have a de-risking effect on its own. “We’ve had a dozen people tell us they couldn’t get money from banks until they went through our process,” she said.