Editor's Choice


Nick Denbow’s European report: Will UK industry pull out of the Brexit torpor?

February 2019 Editor's Choice

Whether the UK – whoever is in charge – decides in March to remain in the EU, drop out, or make a negotiated partial exit, the last year has been disastrous for UK industrial investment in instrumentation and control. Presumably this is a result of the hold placed on investment across most manufacturing industries, which has resulted in a lack of new product releases. Possibly UK businesses don’t yet know which way to turn, or for that matter, which of their instrumentation and control customers will survive.

European companies take a longer term approach

The near two years of uncertainty for these companies is a knock-out blow to the ultra-short term approach of UK industry, where investors and accountants rule and demand a one, or at most, two-year payback from any expenditure. Possibly this is a personal hobby-horse, but in Europe, particularly in Germany and Scandinavia, companies and investors think in much longer timescales. My normal example of this is Endress+Hauser. Its output of PR and news is much less frequent than possibly occurs with British or US companies, but this has continued as previously – these European companies are two years on from when the UK paused for Brexit. E+H is continuing to make investments for the future, outside the EU in particular, which is surely what UK companies were supposed to be doing, what Brexit was supposed to achieve?

In November E+H announced the opening of its new €3 million state-of-the-art calibration and training centre in the industrial city of Jubail, Saudi Arabia. Typically for E+H, the centre features a classroom with interactive technology, an extensively equipped workshop and a fieldbus training laboratory. It offers practical, hands-on training programmes designed to impart knowledge on measurement technologies and process control systems that are in demand by the hydrocarbon, power and water and wastewater industries. Subsequently, the Group announced the appointment of Dr Andreas Mayr as COO, to be responsible for all sales, production and support, and effectively to be a deputy CEO to Matthias Altendorf. As ever, this is an internal, planned promotion. It also enables Altendorf to focus more intensely on aligning, growing and strengthening the whole Endress+Hauser Group, which particularly seems to mean internationally.

UK government encouraging power projects

There are some long-term investments made in the UK. However, these seem to be mainly financed by government, or government guarantees. At Hinkley Point, the build programme for the EDF large EPR (European Pressurised Reactor), based on the Areva (France) and Siemens (Germany) design, continues. The long timescale of this build, based on past examples, will be extended significantly, and cost overruns will be inevitable. The government deal will see the UK grid buying the Hinkley power at £92/MWh, whereas current offshore wind power is costing around £60/MWh.

Wind turbine developments continue apace, and the latest offshore developments from companies like Siemens in Germany are producing realistic designs for 75 metre turbine blades, over twice the length of current wind turbine structures. These will inevitably result in a lower output cost for the grid companies. The next step will be to have the turbines installed on moored floating structures, rather than towers embedded in the sea floor, enabling wind turbine offshore operations in many more locations around the world.

The government has given some encouragement to the small modular reactor concept, with money for design studies and proposals: but not much concrete help or commitment. As a result of this, and other Group problems in the USA, Toshiba (who acquired Westinghouse) have closed down its planned NuGen nuclear reactor site in Cumbria, which was the first of the planned ‘new nuclear’ modular plants, after the rescue plan by a South Korean company failed to get UK Government backing. At Wylfa in North Wales, a Hitachi nuclear plant installation has started, with 33% funding from Hitachi and each of the UK and Japanese governments. As the UK winter approaches, the Hunterston B number 3 nuclear reactor has not yet come back on line, after some cracks were found in March. Instead of November, it will not return to service till February. Currently unit number 4 is also offline, undergoing an inspection, and it is ‘hoped’ this will return to power in mid-December. Hopefully, the winter will not be too cold.

Another useful government funded project was the White Rose Carbon Capture and Storage project at Drax power station. The Government withdrew the funding some years ago. Now Drax has from its own resources converted four of its coal fired boilers to biomass (wood pellet) fuel.

The UK is currently a partner in the £9Bn Galileo project, which is developing a modern version of a GPS system, specifically for military and security applications, but also with a lower resolution commercial system. The UK has invested £1,2 Bn so far in this project, and has done most of the work on the high definition aspects. But apparently the European Union has decided that the UK will not be allowed access to the high resolution information available from Galileo, after Brexit!

Apart from the government, there are some private companies involved in long term investment projects in the UK. One notable example is BP, who has invested £4,5 Bn in oil and gas export facilities from the Clair Ridge field, west of Shetland, in co-operation with Shell, Chevron and ConocoPhillips. Oil has started flowing down a new 5,5 km pipeline to the Sullom Voe terminal, and will do so for the next 40 years. A gas pipeline has already been exporting natural gas to Sullom Voe. Further drilling around the platform on the Clair Ridge field will continue for the next ten years, to produce further wells.

As for run of the mill projects, let’s hope that some confidence can be resurrected, and that the general C&I industry does regenerate soon.




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