News

Extrusion blow moulding, UK manufacturing and Net Zero.

In a recent business interview our MD, Chris Wagner, was asked about Nexus Packaging’s factory build and his thoughts on Net Zero and the UK manufacturing sector.

Extracts from that interview are below.

Why did you decide to start plastics manufacturing?
We had a family business which carried out cavity wall and loft insulation, predominantly for Scottish local authority housing. By the mid-1980s, the insulation programmes were coming to an end and my father, who was quite a visionary, was aware that an increasing amount of fresh milk was being sold by supermarkets in plastic bottles. There were no plastic milk bottle manufacturers in Scotland so, after securing contracts with a number of dairies, we bought two blow moulding machines and started production.

That must have been a challenge to move from insulation to plastics.
It was, but my dad and I had always been into machines, cars, motorbikes, go-karts, aeroplanes and racing cars. Although very complex, a blow moulding machine is just another machine. We built up the blow moulding business and by the time we sold it in 1996, we were operating eight machines and manufacturing 12 million bottles per month.

You recently opened a factory but not for milk bottle manufacture?
Yes, we have invested over £14M to build what we consider to be the most modern, energy-efficient, extrusion blow moulding factory in Europe. We manufacture containers for industrial use and supply to the agrochemical, automotive and general chemical markets.

Why did you decide to make that level of investment so close to retirement age?
Well, I was only 61 when we decided to build the factory and I intend to work for many years yet! At that time Nexus Packaging designed containers and moulds but we sub-contracted all the manufacturing. Unfortunately, our largest manufacturing partner had not adequately invested in machinery and people. As a result, the product quality and service were dropping to a level that was unacceptable. We really had no choice but to invest in our own facility because we were going to lose large chunks of business if the product didn’t improve. We shared our business plan with that manufacturing partner and asked them to be a joint investor but they said no, so we were on our own. I am sure that if we hadn’t got back into direct manufacture, we would be out of business now.

What were the main challenges you faced?
There were many! The first one was the lawyers. To secure a competitive price on the building construction and get the project started on time, we had to commit to an incomplete building contract. Unbelievably, it took the lawyers longer to agree the building contact than it did to build the building! Getting the electricity supply and substation installed was very last-minute which bought additional stress. Thankfully, when it came to deciding on machine specifications and the factory layout, we had the help of blow moulding legends, Carl Boniface and Robin Enderby, who had worked with us in the milk bottle days. We were fairly confident in what we were doing but it was very helpful to have their input. Unfortunately, some of our people were not able to respond to the pressures and commitment that came with running a 24/7 manufacturing operation and left to do their own thing. That was very disappointing at the time but, as a result, we now have a much leaner and more technically focused management team.

How does your business differ from competitors and give you an advantage?
We run very modern machinery which helps massively. The average age of an extrusion, blow moulding machine in the UK, outside our factory, is over 30 years. These machines are slow, unreliable, energy-inefficient and difficult to run. In addition, at Nexus, we have the latest compressors, chillers and blenders feeding our machines plus 280 square metres of solar panels which further reduce our energy costs.

Extrusion blow moulding can be challenging. We are dropping hot plastic into fresh air, clamping it inside a water cooled mould, then inflating, cooling, deflashing and leak testing all within a short time period. There are an infinite number of variables affecting the process; the polymer melt properties, extruder speeds, pigment additives, recycled polymer input, ambient temperatures, mould temperatures, bottle weights, shrink rates and so on. The level of control and telemetry on our all-electric machines is excellent and allows us to monitor and adjust machine settings to a level not possible on older machines.

Also, we really care about our people. We have tried to create a working environment where our staff feel valued, can develop and also have a bit of fun. Why should an employee care about the company if the company doesn’t care about them?

In addition to Nexus Packaging, we run an I.T. business, Nexus Data Systems, so software updates, remote monitoring and operation of the machines is straightforward. I am confident that, at Nexus, we have the skills within the businesses to fully utilise the available technology as it evolves.

You mention technology, do you mean AI?
My limited understanding of how AI might contribute to our industry is using machines that learn as they operate and readjust their settings to cope with a changing situation. For example, a pick and place unit will automatically alter its range of movement in order to deal with varying sizes in products and packaging rather than a technician having to reprogramme these.

I suspect that AI is being over-hyped, predominantly to justify the incredible amount of money being invested. I am old enough to remember the dot-com boom and bust of the late 90’s and early 2000’s. We knew the Internet was going to be massive, but many business startups failed because once the hype faded away, they were unable to generate sufficient revenues to keep trading. Obviously, the Internet changed everything, but the people who made serious money were the ones that were able to put the technology to a practical purpose and generate cash.

I think the greatest advancements will be in robotics, where we will have machines that are able to replicate the complex, manual tasks that humans would normally carry out. Our blow moulding machines are fully automated and now that we are more confident in the quality and consistency of what we manufacture, we are starting to automate our downstream systems. Our engineers will require to have the skills to programme, operate and maintain these robots, in addition to running the moulding machines which will bring added pressure. The plan is to increase output whilst maintaining existing staffing levels and reward our people more.

How do you view the future of UK manufacturing?
I am extremely confident in Nexus Packaging’s future. We are technically very strong and many of our competitors are running antiquated machinery and losing money. It is inevitable that there will be major restructuring and reinvestment within our industry and Nexus will play a significant role in that. The under-investment in extrusion blow moulding is not isolated to the UK. European manufacturers haven’t invested sufficiently either and we are exporting an increasing amount of higher value product into Europe and beyond.

I do however, have very serious concerns about the future of manufacturing in the UK. Successive governments have failed to recognise the value of manufacturing and not offered the support required. We must increase our exports and reduce our imports in order to minimise the country’s trade deficit. If we continue to import more than we export, we are effectively shipping our money abroad and getting poorer as a country.

Do you think the UK’s Net Zero targets are hampering manufacturing growth?
Yes, I do. Whilst I am aware that we have an absolute responsibility to safeguard our planet and maintain its ability to sustain life, we have to recognise that the UK is responsible for only 0.7% of global carbon emissions.

Despite what our politicians say about green energy being cheap, the UK has one of the highest electricity costs in the world. Only 36% of our electricity is generated from fossil fuels and our commercial electricity cost is above 20 pence per kWh. China, the U.S. and India are collectively responsible for 50% of the world’s carbon emissions, 63% of their electricity is generated from fossil fuels and they pay between 5 and 7 pence per kWh. This is a quarter to a third of what we pay.

If we lose manufacturing to China and India we are actually increasing global carbon emissions. The fact that over 10% of the cars now sold in the UK and Europe are manufactured in China should be the ultimate wake-up call for western governments. Unfortunately, I don’t think our politicians realise what a threat to our long-term prosperity China is. Their government is ruthlessly determined to make China the world’s leader in manufacturing and technology. And they are getting there. I buy computer hardware that is made in China for open source software projects and the performance, quality and value for money of the components are way ahead of anything available in Europe or the US. This is a real concern.

So what support do UK manufacturers need?
Cheaper electricity for a start. And massively reduced business rates. At Nexus in Glasgow we pay £200K per year in rates and we receive nothing in return. We pay for our own water, waste, lighting, security and we even have to clean the litter from our road ourselves.

We need to do something radical with taxation too. The tinkering around the edges isn’t working. We should consider abolishing income tax for anyone under 32 years of age. Let’s get young people into paid work as early as possible after leaving school, college or university. We need to ensure that they have the spare cash to get them onto the property ladder and start a family. Many are put off having kids simply because of the cost.

I don’t think people over 64 should pay tax either. We should encourage them to keep working and pass on their skills and knowledge to younger generations.

But what about the loss of tax revenue?
I think the benefits will far outweigh that. Perhaps as a legacy of our ship building history, in Glasgow we still have a good number of young people who choose to have an engineering-based career. However, there are too many kids who are allowed to drop into social security dependency which often leads to isolation and drug abuse.

Scotland has had the highest drug death rate in Europe for many years and the Scottish government continues to ignore the problem. We need to make the financial rewards for young working people far higher than being on the dole because the real cost of substance abuse is immense. Taking on the drug gangs will be difficult and dangerous but we need a government that is tough enough to do it.

What advice do you have for young entrepreneurs?
The advice I have for anyone is to work hard, be honest, have fun and be kind.

And surround yourself with good, talented people. You won’t achieve much working alone. I think there have been over thirty key people who have helped me over my working life, but they wouldn’t have if I hadn’t treated them with kindness and respect.

Keep stretching yourself and keep learning. You won’t grow as a person unless you are prepared to regularly step outside your comfort zone.

When I was younger, and in a situation where I was out my depth, I would ask myself, “OK, what would someone who actually knows what they’re doing, do here?” Then I would act like that person. Eventually you build up enough experience that you do know what you are doing, most of the time!

What makes you happy?
Outside of work it is my family, walking, jogging, cycling, flight controllers, hardware and software.

I still get a great deal of pleasure from work. Running complicated machinery well, is extremely satisfying. As we say here “every day is a school day” and we are constantly learning. Very often we are learning from the mistakes we make but as long as we share these and the solutions with the full team, it is a positive. I enjoy the numbers side of business too; sales, sales value per kilo, raw material cost, electricity, labour, packaging, transport, storage, depreciation and hopefully, profit.

I enjoy seeing our young operators learn and grow increasingly confident in running their blow moulding machines. We are trusting them to accurately operate a bit of kit that can cost in excess of a million pounds and produce around £7,000 of good product over their 12 hour shift.

Above all, I love walking into the factory, seeing the machines running smoothly and the green and white “In Service” lights on at the top right-hand corner of the machine guards.

So, what makes me happy? Lots of green and white lights!