UK Support and Service industry a high value employer and a net exporter, Written by Raj Mehta
Commissioned by The EPSRC Centre for Innovative Manufacturing in Through-life Engineering Services
We have a new report that we would like to share with you. The TES centre has commissioned a report in TES Market Size, the abstract and link to the full paper can be found below. If you would like further information or if you have any questions about the report or the centre please feel free to get in contact with the centre:
Tel: +44 (0) 1234 75 0111 EXT:4031
Email: enquiries@through-life-engineering-services.org
TES Market Size Report - Full Paper
Abstract
In 2014 – 2015 the Support and Service industry generated over £11,000 million in revenue in the UK; and over £23,000 million globally that is more than 50 percent of the revenue comes from exports.
The value of this sector will be over £35,000 million by 2025 and exports will be over 65 percent.
In the same period the addressable global market will grow from £490,000m to £710,000m; the UK share of the market will reduce from 5.1% to 4.8%.
There are many strengths in the UK industry and with the right focus and execution the share of the global market can easily reach 7 to 8% by 2025.
Executive Summary
• In 2014 – 2015 the Support and Service industry generated over £11,000 million of revenue in the UK and over £23,000 million globally meaning that more than 50 percent of the revenue comes from exports.
o Just under 6000 companies employed over 107,000 people with an average wage of £42,000, cf. overall industrial average is £27,000 (Source ONS data from December 2014 SIC Division 33)
• The value of this sector will be over £35,000 million by 2025 and exports will be over 65 percent.
• Successful Engineering companies made the switch to service centric businesses from mid-1990s to early 2000s
o For such companies revenues from Support and Service account for between 50 and 60 percent of their revenue
o The margin from the support and service is much greater than the margin from selling the product
o In times of lower demand for new product purchases, such as during a recession, the service and support revenue sustains companies.
• Observation of successful companies identified a clear vision, focus and execution to becoming a service provider
o Design and implement supply chain for service
o Divestments, mergers and acquisitions to grow in markets of interest
o Strategic alliances and joint ventures to win long term business
o Capital investment to improve facilities and infrastructure
o Regular focussed research and development investment (between 5% and 8% of total revenue)
• Government contracts should include support and service for major projects
o In the rail industry the Government have specified such contracts for the Thameslink, Crossrail and Intercity Express Programme.