UK machinery suppliers rethink their approach to competitiveness

As the focus for international packaging machinery manufacture shifts to eastern Europe and the Far East, UK engineering companies are finding it harder to compete without outsourcing parts supply or construction.

Process and Packaging Machinery Association (PPMA) president Mike Randall reports that in machine manufacture across Western Europe profitability is under pressure. "People are looking more and more towards working in Central and Eastern Europe, China and other parts of Asia," he says. "China dominates the agenda." Manufacturers are developing strategic partnerships in these parts of the world.

Even the consolidated German-owned machinery giants are feeling the pressure. Bosch Packaging Technology says that by early 2005, 51% of its total workforce was based outside Germany.

The director of one UK machinery company predicts that the number of domestic equipment suppliers which manufacture (rather than importing or simply assembling) could fall by one third over the next five years. This is said to be in line with government and Confederation of British Industry forecasts regarding manufacturing as a whole.

But Randall at the PPMA says: "Currently there is a trend for manufacturing to migrate away from the higher-cost parts of the world, but our members are fighting back by containing costs and targeting high-growth technologies."

China will emerge as one of the major producers of packaging machinery over the next few years, Bosch predicts. According to the company, German-owned manufacturing has replaced the US as the leading supplier of equipment in this sector, followed by Italy and Japan as the third and fourth largest.