‘Rebalancing the economy’ has become somewhat of a buzz word for politicians, business leaders and media commentators trying desperately to reassure us that the UK is not going to slip back into recession anytime soon.
The main thrust of this approach seems to focus on a swing back to supporting the notion of ‘making things’, not surprising considering the difficulties experienced by financial services and widespread cuts to the public sector.
Yet this ‘diversification’ of the business base is nothing new. The more astute amongst us will explain that many companies – from every industry imaginable – have been diversifying the way they work.
Put simply, West Midlands companies have had to move with the times and quickly recognise that competition is no longer down the M6 or M5, but in every corner of the globe from Krakow in Poland to Shanghai in China and Bangalore in India.
Most have diversified their product offer, others have changed processes to reduce costs and, the real industry drivers, have taken traditional competencies and moved into new markets and technologies.
Simon Griffiths, Chief Executive of the Manufacturing Advisory Service, has seen firsthand the difference diversification can make:
“The West Midlands has set the precedent for ‘doing things differently’, sparked mainly by necessity after the heavyweight closures of Agco, LDV, MG Rover and Peugeot in Coventry.
“Firms who had been used to supplying the same customer with the same product had to adapt to survive and a number of business support initiatives were introduced to achieve this.”
The former Land Rover and GKN engineer continued: “This has helped our companies steal a march on European and international rivals and many have taken core expertise and translated it to new growth markets.
“In recent years, this has seen businesses develop new services, technologies and products for telecommunications, the new generation of aeroplanes, renewables and low carbon advancements. The latter is a massive opportunity for our region.
“Ultimately what’s important for businesses is not have all their eggs in one basket, but to spread the exposure to multiple sectors. Therefore if one part suffers trauma, the impact is limited”.
The Life Sciences market – one of six priority sectors highlighted within the Government’s Growth Review - is another that is catching the eye of UK firms.
And it’s not difficult to see why. Latest figures show a commercial potential of £19bn, covering anything from medical products and R&D to multi-million pound healthcare infrastructure projects.
The good news is that it’s not just the science and medical specialists that are benefitting. Companies from across complementary sectors, including interiors, furniture, building, architecture, professional services, ITC and retail can all use their specialist skills, products and services to meet growing demand.
“The West Midlands already has a strong reputation within the Life Sciences arena with it boasting 1350 businesses, employing more than 7,000 people and turning over £1bn. We also boast some of the strongest concentrations of bio and med tech companies of anywhere in the UK,” explained Chris Dyke, MedilinkWM’s Connectivity Director.
““Diversification uses change as an opportunity to grow a business. It may involve the need for new lines, skills, techniques, standards or facilities, but it can be surprising how easily components can be made for the medical and healthcare market.”
He went on to add: “We have many years of experience working with companies who have achieved rapid and expansive growth by diversifying into the medical technology market. In terms of knowledge and expertise, the UK is rich in SMEs with gold standard capabilities that can take a product from initial design through to manufacturing and distribution.”
MedilinkWM, which provides specialist business support to companies selling products and services to this arena, is currently running a ‘Heads Up’ series of events aimed at encouraging more firms to diversity into the Life Sciences sector.
There are four sessions left including Hospital Walk and Talk (13 Sept), Smart Home Technologies (29 Sept), Designing the Environment: GP & Community Clinics (13 Oct) and an Innovation Panel on 1st December.
Philip Clarke, Managing Director of Kingswinford-based Clamason Industries, is already a massive convert to the art of diversification.
His company, a leading pressings specialist, has a proven track record in supplying the automotive industry but following a drop in orders decided to re-focus and go after new markets, such as Life Sciences.
It proved a wise decision with its auto-related lean manufacturing experience securing an order to supply springs to the ‘Solostar’ insulin pen.
Philip concluded: “Thanks to working with car manufacturers for many years, we can easily offer the level of quality and innovation companies involved in Life Sciences expect.
“The ‘springs’ contract has already risen from £800,000 to £1.5m in the first year so you can clearly see the potential is there.”
Whether we dress it up as rebalancing the economy or good old diversification, the mantra of ‘doing things differently’ will be vital if the West Midlands and the UK are to impose themselves on the upper echelons of the global marketplace.
Diversification... the spice of business life?
