The Betrayal of UK Manufacturing
How the failure of successive governments and their civil service staff to support UK Industry was exposed by Covid-19
Written at the height of lockdown, the premise of the presented article is to consider some of the lessons that may be drawn from the supply problems encountered in the UK during the Coronavirus pandemic of Spring 2020.
The article is structured in the following way:
As the pandemic developed it became increasingly clear acquisition structures in the UK’s public sector were not fit for purpose in such a crisis. Weaknesses were exposed in all aspects of the supply chain which are readily captured by the three sub-sections below.
2.1 A failure in procurement
As the government lurched between herd immunity, inaction to positive action, initiating and then cancelling testing it was increasingly clear they no longer had control of their supply chains. Successive governments had in effect sold off the UK’s industrial base leaving the country with an import-dependent economy. Such a situation may have suited those in power focussed only on the next vote and a coterie of financial markets obsessed with short-term gain, but which ultimately left the UK and its population highly exposed to the risks presented by the pandemic
2.2 A “low ball” contracting culture
The failure of the supply chain in the UK was further aggravated by a contracting culture developed over decades under Governments of all persuasions which focussed on “low-ball” bids utilising poor and out-dated specifications and heavily dependent on either a small cartel of service companies who exercised too much power or a complex web of offshore suppliers. Such a set of circumstances completely exposes the lie of “Best Economic Value” whereby the low fee rates proposed in any bid are completely outstripped by successive “out-of-contract” charges or the supply of specification compliant, functionally inadequate products and services were delivered to the UK for foreign economic benefit.
2.3 An inherent lack of technical expertise
Ultimately, it became increasingly clear there was a systemic organisational failure to either understand or procure manufactured goods in a supply landscape where the UK’s needs were well down the list of priorities of overseas providers. Nor, it would seem, was there sufficient technical expertise or product experience among those charged with meeting the needs of the crisis to be able to swiftly assess and act upon the many offers received from the small population of agile, creative and responsive manufacturers who, in spite of years of Government failure, do still exist in pockets around the UK.
In support of the hypothesis the following observations were drawn from information in the public domain filtered through the lens of scepticism given the UK media and in particular the UK’s public service broadcaster were determined to only report failure throughout the period of lockdown.
The major weaknesses fell into three main areas:
- Product Shortages
- Supply Chain Management
3.1 Product shortages
Beginning and ending with PPE through drugs, vaccines, food supply and selfish hoarding it was increasing apparent that the UK was hyper-dependent on offshore supply particularly in relation to manufactured goods and very weak in our ability to access critical raw materials such as P1 to P3 rated materials for face masks, coveralls and aprons.
It was also obvious that after the build-up of supply following the modelling of a flu pandemic in 2014 no-one in the Public Sector took responsibility for the maintenance or replacement of the assets acquired. Otherwise, why was it some 50 million items of stored PPE were not fit for purpose at the outset. To further aggravate this situation, it was clear from the massive amount of specification re-writing and demands placed on external specialists, the public sector had allowed their acquisition process to be undermined by a portfolio of inflexible, time-expired, technically incomplete specifications.
Even with the acquisition through begging, stealing or gazumping other buyers to access critical equipment, the response to the crisis suffered serious missteps in the logistics of local supply. It was increasingly apparent as the crisis continued the public sector had failed to comprehend the likely demand, a problem intensified by a demonstrable lack of locational awareness.
More importantly, the decline of UK manufacturing which has been overseen by successive governments, with an ignorance bordering on contempt, since the end of the second world war led to a lack of operational resilience both within the supply chain and among those charged with acquisition. As a consequence, time and money was wasted on inadequate equipment, materials and delivery mechanisms.
3.3 Supply chain management
Following on from the failure of logistics noted above a more general set of weaknesses related to the Public sector acquisition processes and systems were exposed as ministers demanded solutions to supply shortages. It was clear that the structures in the procurement process were wholly inadequate in the way they addressed the numerous offers of support and help made by responsive SMEs who understood what was needed in the crisis far better than any of the Government and other public sector buyers.
As various government officials grabbed their clipboards and ran their checklists, demanded reams of supporting evidence and desperately tried to ensure they could never be blamed, the response to the pandemic became increasingly erratic, ill-targeted and blame driven. Meanwhile, potential suppliers awaited even an acknowledgement of their offers of help, front-line staff became increasingly distressed with the shortage of equipment, PPE and intelligent guidance, whilst the general population watched on with increasing fear as the pandemic grew in ferocity and impact.
It was therefore obvious that the obsession with checklist, process and personal; protectionism had over time led the Public Sector to a sclerotic, incompetent commercial acquisition approach totally unsuited to the type of crisis generated by the advent of Covid-19.
4.1 High-level factors
In simple terms there have been failures which can readily be attributed to all or any combination of the following four factors:
- A lack of management and leadership
- A combination of management and supply shortfalls
- A severe weakness in logistical planning
- A series of commercial failures
4.2 Insufficient Management and Leadership
It has to be acknowledged the evolving pandemic clearly moved beyond the crisis plan derived from 2014 and was exposing a significant lack of validated information regarding the epidemiology of the Covid-19 virus. Against this however must be set the demonstrable lack of learning from the experiences of other countries both in SE Asia and Europe. Instead, in an appalling act of blind faith, the Government and the public sector presumed the modelling of a flu pandemic applied.
The false confidence derived from a study completed in 2014 and then largely ignored led to several examples of the lack of crisis management and the leadership within the pandemic response.
- A series of failures and delays in operational use and guidance
- Use, re-use and disposal of PPE
- Testing delays and inadequate sourcing
- Ill-suited commercial structures
- Designed to be risk-averse and inflexible
- Acquisition by generalists not specialists
- Process compliance before crisis management
- Available expertise not used or ignored
- A lack of departmental acquisition competence
- Personal protectionism
- No decision ensures no reputational risk
The most disappointing aspect of these failures, identified at the height of the pandemic, is they continue to compromise the UK’s response even though the first peak of the pandemic has declined and a series of relaxations in lockdown have occurred.
4.3 Management and Supply Shortfalls
The Turkish PPE debacle perhaps represents the most memorable example of supply chain management failures but was really only symptomatic of a list of systemic failures within the public sector the pandemic exposed.
In brief, promises were made that over 40 tonnes of PPE had been secured from Turkey and would be delivered within days, firstly the Turkish government claimed priority over the goods, secondly the Turkish customs authorities held up dispatch, thirdly when it finally arrived two-weeks late there was only 11 tonnes of equipment some 30% of which proved inadequate and failed to meet specification.
So, who was the specifying authority, who was responsible for overseeing the transaction, how did the UK Government expect to ensure delivery, why did the country have to go abroad to acquire these goods and many more questions.
In basic terms the following issues became glaringly apparent:
- A failure in “real-world” risk management
- Identifying critical onshore manufacturing infrastructure
- Identifying essential onshore manufacturing capability
- “Hollowing-out” of UK manufacturing
- “white-collar” versus “blue-collar” view of manufacturing
- “low-ball” contracting – cheapest compliant offer instead of best economic solution
- Failure to manage national capability strategically and tactically
- Failure to control overseas dependency of the supply chain
- Pre-pandemic known problems but not addressed
- National testing capacity and vaccine capability
- Lack of PPE in a compromised global supply chain
4.4 Logistical Planning
There is an argument based on the limited actions taken after the 2014 flu pandemic the UK should have had the distribution and storage of critical equipment under control. What became increasingly apparent however was the dilettante attitude to asset management, the lack of real understanding of how, when, why and where to establish distribution networks and storage systems as well as a lack of capacity totally compromised the UK’s initial response to the needs the pandemic drove.
The succession of failures in logistics planning can be summarised:
- Insufficient operational flexibility
- Distribution and storage networks
- Insufficient competent resource
- Urgent requirement to replace civilian management with military planners to achieve progress
- Failures in ensuring stored equipment was fit for purpose
- Failures in controlling external supply chains
- Insufficient control in the distribution network
- Over and under-supply driven by poor network planning
- Lack of crisis planning and capacity to ensure urgent response was feasible
4.5 Analysis: Commercial failures
Too many to mention but falling into one or more of the four categories below.
|The development and maintenance of inadequate specifications
|The operation of skewed competitions in the acquisition of supplies
|Inflexible supplier management
||The effect of rice-bowl politics
|A||The coronavirus pandemic has been a generational crisis which has and continues to cause a tragic loss of life. It has challenged the capabilities of a recently installed government who are viewed with scepticism and mistrust by the general population. It has also visibly demonstrated an alarming lack of effectiveness in the management of supply chains by the UK Public Sector|
|B||The crisis has exposed the desperate consequences of allowing the manufacturing base of the UK to become hollowed-out by a failure to properly assess the impact of overseas ownership, off-shore supply chains and a catastrophic focus on the cheapest offer regardless of provenance, supply guarantees or specification compliance.|
|C||It has served to amplify the lack of understanding those responsible for procurement have of products, manufacture and asset management. It has also illustrated the self-sustaining inefficiency of acquisition approaches based on process compliance and check lists to the detriment of innovation, flexibility and speed of response. All of which have led to critical shortages, distribution failures and a reliance on those who do not have the interest of the UK at the top of their agendas|
|D||Ultimately the pandemic has clearly demonstrated the critical need to undertake an urgent, risk-based reconstruction of industrial strategy, public sector acquisition, the availability and use of industrial expertise within government as well as addressing the culture of white collar versus blue collar and generalists versus specialists within every ministerial department.|
Step 1- The immediate development of a comprehensive UK-wide industrial strategy setting out the critical capabilities that MUST be retained nationally and committing funds to their realisation
Step 2 – A significant increase in investment in innovation, infrastructure and industrial capacity in partnership with the private sector at a level that matches or exceeds the best of the UK’s peers
Step 3 – The immediate creation of a cross-governmental funded agenda for the economic levelling-up of the nations of the United Kingdom including the creation of regional centres of excellence for specific aspects of the developed industrial strategy.
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