Manufacturing Assets: Planning for the Future

Andy Hirst
Are manufacturers proactively planning their assets for the future?

As the manufacturing industries become faster, more responsive to changing global markets, closer to customers and technology-driven, their built environment is changing. The most successful organisations are capable of rapidly adapting their physical infrastructure to exploit advances in technology, withstand fluctuating demand and align with product lifecycles.

Most manufacturers now need less production space than before, but continuing agility means they need to reconfigure their facilities for different contracts and products. This demands flexible spaces, carefully planned to meet often unknown future needs.

Planning is challenging, when asset investment decisions are typically driven by short-term contracts and companies are often seeking three-year payback, for example, on an asset with a 30, 40 or 50-year lifespan.

The most successful organisations are capable of rapidly adapting their physical infrastructure to exploit advances in technology, withstand fluctuating demand and align with product lifecycles.

We encourage our clients to take a longer-term view, analysing the true value proposition of the building and its lifecycle. Recognising built assets as a core part of the business, rather than an adjunct, is helpful in looking beyond the length of an initial manufacturing contract.

Creating a long-term (ideally 20-25 years) asset investment plan for the property portfolio, and for individual sites, allows creative thinking around tomorrow's facilities – what are their capabilities, what will they look like, where should they be, what will they cost and, crucially, how future-proof are they?

There is a significant lack of good-quality industrial space and buildings in the current UK market. Manufacturers are seeking to upgrade and expand their existing asset stock, against a legacy of lack of foresight and investment. The cost of upgrading or demolishing older buildings that have not been adequately maintained can be prohibitive, due to factors such as contamination, structural integrity and the unplanned adaption and extension of building services through their estate.

For new facilities, flexibility will ideally be designed in, at project inception, with comprehensive optioneering to identify the best value proposition. For example, it may be worth investing more in the building's capital cost in order to provide the flexibility to potentially service a future contract. The same can be said for sustainable elements in the design. Altering lightweight construction is often easier than making alterations to heavier, more industrial buildings.

...the lifecycle and maintenance costs of manufacturing buildings are often overlooked in favour of the better returns and shorter payback timeframe of manufacturing and production equipment.

Asset planning should include facility operation, maintenance and upgrade/replacement. As with capital cost planning, the lifecycle and maintenance costs of manufacturing buildings are often overlooked in favour of the better returns and shorter payback timeframe of manufacturing and production equipment.

To achieve demonstrably sustainable facilities for the long-term, significant investment decisions are needed. These decisions inevitably have a medium to long-term payback. Manufacturers which maintain a longer-term, holistic view of their assets will emerge from the recent downturn in a better position, with more efficient facilities and a stronger property portfolio.

Faithful+Gould understands the complex interaction of buildings, services and infrastructure in efficient manufacturing and distribution operations. We are supporting many manufacturing companies as they change their organisations, processes and capabilities to achieve a more competitive position in the market. We think beyond the building, working with our clients to fully understand their manufacturing process, and ensuring that their built assets are aligned with their future plans.

Written by

Andy Hirst Associate Director Contact me View my profile >