Mat: I’m the Knowledge Transfer Manager for Photonics at the Knowledge Transfer Network. On a day to day basis, I make connections. I guess it’s probably the primary thing. Making connections for Photonics companies and other organisations, connections between themselves for collaborative work, connections with perhaps, sources of finance, supporting finance through grants and also getting more involved in Angels and VCs as well.
Another key element of my work is working with Photonics stakeholders more widely in promoting Photonics across the UK and in Europe and beyond. Working closely with the UK Photonics Leadership Group, for example, in conveying the importance of Photonics and supporting Photonics more broadly across the UK.
Ben: Fantastic! I have seen reports predicting significant growth in the Photonics market over the next 10 years and beyond. In our previous conversations you have mentioned the idea of landscape analysis, for Photonics. Why do you believe that landscape analysis is important for Photonics?
Mat: Getting a good handle on the data of what Photonics companies and Photonics organisations are in the UK and what they’re doing is really important.
For regional and local enterprise partnerships here in Scotland or the South West of England, understanding what the size of the Photonics economy is in their area allows for comparison with other sectors and industries. We hear a lot about place, and sort of between the regions and nations or the United Kingdom. There’s a related activity in understanding the different kinds of Photonics businesses and where they are as well. It’s quite important to understand where the strengths are.
It’s also important to get a handle on what Photonics is worth to the UK. If you’re trying to say to the taxpayer, ultimately, but to treasury, we should really invest in any aspect of Photonics and supporting Photonic companies.
The first thing is to explain what Photonics is, but then actually put a number on it. Having a number that says Photonics is worth over £13 billion to the UK economy and here’s how it compares just as a headline figure is very useful especially if you can measure a trend and show growth.
In fact, this number is one that many people ask us for to help in making decisions about investment for R&D, for example, at a national or regional level, that number comes out and not just in Photonics. In things that relate to Photonics, like Quantum, understanding what that number is for Photonics is important. People involved in Photonics across the UK end up needing that number and derivations from it, quite a lot.
Ben: So what’s changed since the last analysis? What are the numbers telling you and pointing towards?
Matt: The first thing is it’s growing. The most recent figures show we’re at £13.5 billion UK wide. The previous figures from two years ago were £12.9 billion. We’ve got figures that show growth from 2013 to now at around 4.3% per year.
Then, making a comparison, the growth is something like four times the average UK manufacturing growth. So you can compare Photonics as a Manufacturing Technology to all manufacturing, and that compares well in fact in the last two years, Photonics growth is 8.4%. So that’s interesting and we benchmark this data.
Other people do Photonic Landscape analysis at a global level. SPIE, for example, do this and they’re showing on the component side, global growth of 6.6%. So, we’ve seen the numbers are going up.
A word on the mechanics of how we get these figures, we take a long list of Photonics companies and we look at the sales and turnover and headcount and actually behind the scenes, we’ve got more accuracy and robustness, as we’ve gone on.
When you look at the distribution of the figures, you see a big economic contribution from a few large companies and a long tail, at the end.
One of the things that throws you off when you’re taking companies and looking at their reported financial data is that lots of larger companies will report from an office in London whereas, actually the manufacturing is done somewhere else in the UK. We’ve manually adjusted that so we can show the growth in the regions.
We now see there are seven parts of the UK, with a billion or around a billion GBP output in Photonics. That was probably a change in the figures, not so much because things have moved massively just because we’ve been able to take a closer look at the data.
Ben: So continuing with the data, aside from the headline numbers, what other findings are you seeing?
Matt: One of the things that we’ve started to look at now is the age of a company. It turns out from the data that the median age of a UK Photonics company is 20 years. In fact, 20% of the companies are over 50 years old. When you look at these “senior firms”, if you like, they are generating over 20% of the revenue and employment. This tends to imply that there’s an age that companies reach peak productivity.
The large companies contribute more to the data so the data has a big head and a long thin tail. So, the vast majority of the revenue and employment comes from just 4% of the firms. It does imply that there’s a kind of critical mass needed in size of a Photonics company to start generating those sorts of revenues. So I think the more data, the more different kinds of data you collect, you can start dicing it up in different ways.
Having a robust data set is good because we can then, when people ask us different questions about Photonics, derive the answer from the data that we’ve got. People might come and ask some different questions, mapping one thing onto another we can make different analysis from having a good data set.
Ben: You mentioned critical mass there, do you think we’re getting to or have reached a point where we’ve got that critical mass of Photonics companies that allows us to see that significant growth start to happen? Do you think there needs to be certain number of companies in a cluster and areas and regions for that then to become an industry that can then grow and develop?
Matt: There’s a few ways of looking at it. There’s over a thousand companies that are Photonics related in the UK. There’s importance in having a voice for UK Photonics which is certainly one of the reasons the UK Photonic Leadership Group exists, and the reason that in KTN, we work closely with those stakeholder groups.
So there’s a kind of critical mass in the voice. There’s an argument though that Photonic companies are other kinds of companies as well. So, manufacturing companies or the defence companies, all the health companies and so there’s perhaps another piece of working with end use sectors to get Photonics in there. For example, in manufacturing, statistically Germany uses lasers far more than we do in the UK and that could enable greater efficiencies in manufacturing.
There’s another way. There’s a Photonics cluster in Scotland, as you know, and it’s probably not there because of lots of government investment. You have universities that have Photonic output and spinouts emerge but also companies move to be close to them, they know they can get provision of graduates and research work. It’s not just graduates actually, it’s also technicians and support services – clusters very often develop like that. It’s just a good place to be because you can get the right people and the people will circulate around.
In other cases like the Southwest of England, where large manufacturers existed but in some cases aren’t there anymore, the resulting ecosystem that sprang up around them is still there. So when thinking of the things that Photonics companies need, it’s perhaps less so much about stimulating the clusters as understanding where the clusters are because they can combine and have strength.
Photonics companies need people and we really do hear quite a lot about the graduate level and technician level and also access to capital investment. That falls into a broader issue around investment in innovation and R&D in the UK. So, Photonics companies are like other kinds of companies, but having a voice for them is good, considering the landscape.
For a few years now, there’s been the all-party parliamentary group in Photonics, which is now Quantum and Photonics recognizing the connection and there’s some good linkages there. That’s important because Photonics isn’t a word that comes straight off the vocabulary of lots of people that are making decisions about government level investments and policy.
I think Photonics is a word that is less familiar than Quantum. People know the word, but probably few people know and understand what it means. So even something as simple as having the word “Photonics” in the vocabulary of stakeholders and decision makers is important.
The US had the national Photonics Initiative and the culmination was they very nearly got Barack Obama to say the word Photonic. I think there’s a clip on the internet somewhere where he gets to photo tonics or something like that. https://www.youtube.com/watch?v=j6HpTqr-zUg But it’s really important having that at the top. The all-party parliamentary group is useful because it raises the profile of the sector to the point where we’re seeing questions from Carol Monaghan for example, in parliament about Photonics.