|
UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 599-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE INNOVATION, UNIVERSITIES, SCIENCE AND SKILLS COMMITTEE
PLASTIC ELECTRONICS ENGINEERING
PROFESSOR
SIR DAVID KING, MR CHRIS WILLIAMS, DR and MR NIGEL PERRY
DR RICHARD PRICE, MR STUART EVANS and DR KEITH ROLLINS Evidence heard in Public Questions 103 - 184
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Innovation, Universities, Science and Skills Committee on Members present Mr Phil Willis, in the Chair Mr Tim Boswell Dr Roberta Blackman-Woods Dr Ian Gibson Dr Evan Harris Dr Brian Iddon Ian Stewart Dr Desmond Turner ________________
Examination of Witnesses Witnesses: Professor Sir David King, former Government Chief Scientific Adviser, Mr Chris Williams, UK Displays and Lighting Knowledge Transfer Network, Dr Tom Taylor, Plastic Electronics Technology Centre, and Mr Nigel Perry, Centre for Process Innovation Ltd, gave evidence.
Chairman: Could I welcome our first panel of witnesses this morning to the Innovation, Universities, Science and Skills Committee's plastic electronic engineering inquiry and welcome Chris Williams from UK Displays and Lighting Knowledge Transfer Networks (what a mouthful, Chris), Dr Tom Taylor from Plastic Electronics Technology Centre, welcome to you Tom, and Sir Nigel Perry, from the Centre for Process Innovation Ltd, welcome to you. I wonder if I could ask my colleague, Dr Turner, to begin this morning. Q103 Dr Turner: Chris, your organisation, with the name that does not trip off the tongue very easily - we will call it UKDL for the time being - how do you measure its success as a knowledge transfer network? Can you give us any examples of the success stories to date? Mr Williams: We have a very large number
of examples of success. We are
officially measured by the Technology Strategy Board on four metrics. The first metric is how many active members
do we have who come and participate in our events and training sessions and
what percentage of the total market does that represent? How many events do we hold and how many
projects are we able to create between our members that are then subsequently
submitted for funding under collaborative research, either under the Technology
Strategy Board programme or into Framework Seven, and, finally, how much
commercial money have we helped our members raise? Since companies like Plastic Logic and Dupont
Teijin are founding members of my network, of course I am going to claim sole
responsibility for the success of Plastic Logic raising $140 million in
its recent funding round. That is
probably a slight overstatement, but we certainly have been instrumental in
creating consortia of companies to bid into the technology programme in the Q104 Dr Turner: You can truthfully say then that the landscape in plastic electronics in the UK would not be where it is now without your organisation? Mr Williams: I believe that is an accurate statement. Q105 Dr Turner: What do you find the big challenge in commercialising technology in this particular field, or is it the same story as innovation across the whole field? Mr Williams: The biggest challenge I see
is overcoming prejudice in the Q106 Dr Turner: You collaborated with what was then called the DTI (we now know that as something that sounds like a character from Jane Austen, and behaves like one as well) on a proposal for a managed funding programme for plastic electronics. This never actually came to pass. Is the Technology Strategy Board taking up this line of approach and, if not, do you think it worth trying to revive the principle of the managed programme? Mr Williams: I think the concept of a managed programme is essential for this nascent industry, and part of the problem that we have is that we are creating new solutions, we are adding value into other product areas. I am able to point out that plastic electronics will be used in life sciences, it will be used within the food packaging industry and it will be used within the pharmaceutical industry. All of those areas need help to understand what it can do for them and what it can bring to them, and the idea of a managed programme, the basic concept, was that the community of plastic electronic interested companies in the UK would determine what it needed to move to mass exploitation but it would not be a dictat down from DTI, "We think this is a good idea. Let us do that, chaps." It would be the community saying, "These are the problems that we have got. Let us address those", and then the community as a whole will benefit and will drive the technology into commercial exploitation. Q107 Dr Turner: Why did it not happen and what are the chances of making it happen in the future? Mr Williams: It did not happen because the proposal run by DTI and the report that was created, which was very well received inside DTI, came just at the time that DTI was going to then split itself into two and the responsibilities travelled down to TSB. TSB have their own interpretation of innovation: they have their innovation platforms, they have the collaborative research programme, they have the knowledge transfer networks, and we are very supportive of those activities, obviously, they pay us, but at the same time they have no vehicle in position today to run a managed programme in the way that DTI used to do - they have no facility at all - and it would be very valuable for our sector, and I am quite sure it would be the same for other sectors, if that were added to their armoury of tools. Q108 Dr Turner: But at the moment you cannot see any receptiveness to that in BERR? Mr Williams: Not at the present time, no. Q109 Dr Iddon: Could you tell us how valuable the support EPSRC gives to plastic electronics is and whether you feel they can do more in this field? Mr Williams: The support that the sector
is getting from EPSRC is a curate eggs: some very good bits and some bad
bits. The good bits are the programmes
that they are running on responsive mode research and the investment that they
have made into some universities round the Q110 Chairman: Can we ask Nigel and Tom if they could comment on that, in terms of EPSRC? Dr Taylor: We see a
continuum here. EPSRC is funding
fundamental research, but the challenge for this industry, the challenge for
the innovation, is to make those connections that Chris was making to the
market place, to applications. The sheer
scale of this industry requires private sector investment on a large-scale. So what we have to do is to take the innovations
that have come in the Mr Perry: I think I would agree with Tom's point. It is a supply chain, if you will, that reaches from the basic research in universities right the way through to the market, and it is important that that supply chain is connected. An understanding of where plastic electronics and printable electronics will be used in the market place is still only emerging. There are lots of applications, there are lots of potential opportunities ranging from smart bandages, through wallpaper, through displays, through to lighting, et cetera, and being able to make the connection so that messages pass up and down that supply chain is critical. I think what EPSRC is doing in pursuing excellence is to be very celebrated. It is the connection then into the support that TSB gives and then the TSB gives on, through devices like CPI and others, and then into industry that is crucial. Q111 Dr Iddon: I thought we had convinced those who judge universities formally by the RAE that they had to take applied research into account. What you are telling us is that you do not think they are taking applied research into account. Mr Williams: They are still looking at the excellence of applied research, and in taking little elements of superb science and integrating them together, there are some very boring little bits of work that need to be done, and the universities, generally, are finding it very difficult to be motivated to address those areas. Q112 Dr Gibson: Can I follow that up? Fundamental Blue Sky assessments can be pretty boring too, as the speaker who has just come in will vouch for, I am sure. You have to repeat things, for example, to establish it. When you say that the RAE is pressurising these people to do things, is that because it is only to get publications? Is that what it is all about? Is that what they mean by boring, that there is no publication and so they will not do it? All research can be boring in a sense? Mr Williams: It is not so much that the performance of the work itself is boring, it is the review of the proposed activities by the panels within the EPSRC college. When they are looking at the scientific content of a proposal they will grade a project proposal and deem it suitable for funding, or not, above the line or below the line, as to the quality and the excellence of the science or the engineering within that project proposal, and if bits of the work are simply, you do not have to be a super scientist to achieve that, it is just tedious work, that project will not get rated as strongly as a project that does contain excellent science. Q113 Dr Gibson: It is their individual judgment, is it? Mr Williams: Yes. Q114 Dr Iddon: Can I pursue this argument a little. You tried to engage the EPSRC to sponsor case studentships in this area and that did not come off. Why do you think you failed to get that engagement going and what do you have to do to reverse the position? Mr Williams: As the KTM we were new boys on the block, and we have not had involvement with the case studentships before; so I can understand the historic arrangements that existed for the award of case studentships going against us in that instance. We are working very closely with the EPSRC in different ways. We are working closely with Imperial to help them create their case for the DSC proposal that they are submitting through to EPSRC, and that has a very heavy focus on industrial content and industrial training of graduates and postgraduates with plastic electronics, and we are also learning more from liaison closely within EPSRC how can we create a better case for a proposal for securing case studentships next time round. Q115 Dr Iddon: I guess this question is to all three of you. Countries like Taiwan and Japan seem to have an ability to drive early stage technologies like this one forward much quicker than we can in Great Britain. There seem to be barriers in our country, and so we lose out to the Far East. What do we have to do to emulate the Far East in getting these early stage technologies to the market? Mr Perry: It is something we looked at very closely when we set up CPI, which is to understand how this innovation supply chain worked, and what we discovered by looking at the American system, where the numbers are quite clear and easy to get hold of, is that for every dollar, pound, euro or yen, or whatever, is spent on the basic research, it can take up to three-times that amount of money to actually commercialise and turn the research into a useful product or service. The interesting question is where does that 63-times extra money come from? The answer, we believe, in CPI, is that it comes from the private sector. So the innovation pace is really set by the ability to engage the private sector in actually translating that research into useful goods and services. The CPI model is based on bringing industry, together with academia, together with the rest of the necessary know-how and, very importantly, the necessary assets to actually allow industry to de-risk innovation. Innovation is a risk-management process. Reducing that risk and getting the investors in to support it is what it is all about. I would suggest, though I have never studied the Japanese system, that there may be a greater industrial involvement and there may be a greater risk-management consciousness in that process. Certainly in those systems that we have looked at, like the American system and potentially like the Dutch system and the German system, we see more industrial involvement, more de-risking processes and more use of devices like the Centre for Process Innovation earlier on in the process. Q116 Dr Iddon: But Tom, we are risk averse in this country, are we not? Dr Taylor: I think I go back to the
comment that Nigel put. We tend to be
risk ignorant; in other words, not understanding all the factors in order to
manage the risks. We can create a
culture similar to the Dutch models by working in a connected way across the
institutions you have got arrayed before you at the committee this morning,
across the EPSRC, the TSB, intermediate organisations like Q117 Dr Iddon: Can you help in this context, Chris, your organisation, UKDL? Mr Williams: Yes, we are totally
committed. We are spreading the word so
that we can encourage the pharmaceutical companies to bring the plastic
electronics into their area by the implementation of anti-counterfeiting
circuitry on the packaging. Looking at
food packaging that can detect if the food has gone off is very attractive to
major stores in the Q118 Chairman: Can we welcome Professor Sir David King to our panel? It is very nice to see you again, David. This particular inquiry, looking at engineering in the broad sense but plastic electronics as a specific case study, one of the motivations for it was as a result of your valedictory appearance before the old Science and Technology Committee where you said this, "In Britain we have a world leading position in a technology that could wipe out silicon chip technology and convert photovoltaics into easily accessible materials at a much cheaper price, and I am talking about plastic electronics." It was a very bold statement that you made at that time before the committee. Are you still as excited? Do you still feel that you under-egged rather than over-egged the possibilities of this technology? Professor Sir David
King: I am probably not
guilty of underrating the possibilities, but I do not draw back from those
comments at all. What I, of course, was
emphasising is the need in Q119 Dr Iddon: In the previous set of questions, the one thing that was not mentioned is that Taiwan and Japan have a partnership approach between industry and government. Do you think that that partnership approach exists in the UK? If it does not, should it be developed in line with what you have just said? Professor Sir David
King: Yes, and you
could use other examples as well. If we
look at the Fraunhofer Institutes in Q120 Chairman: In terms of the UK Government, do you feel that they are making sufficient efforts to support this emerging technology? I take your point that the Government has been averse, and the old DTI was averse to picking winners. Professor Sir David King: Yes, and the Treasury. Q121 Chairman: The Treasury, then, all right. They rule everything, but do you feel that there is a sense of change as a result of the changes to the machinery of government, the way in which we are now looking at innovation, innovation is at the heart? Do you feel the Government is backing plastic electronics? Professor Sir David
King: I do not think I
see sufficient signs of progressive change in this area, but it is not just
government action. We have the one of
the leading financial centres in the world in the City of Q122 Dr Gibson: Do you think sometimes, David, that in this country they say, "Other countries are good. We will let them get on with it and then we will buy it in", and so on? We are always saying that America does everything, but then the Japanese, Indians, and so on. The second question, where does this sit with some of the other industries that have been overlooked in the last few years where we also missed a trick or two? Is this one of many or half a dozen in your opinion? Professor Sir David
King: I am sure it is
one of many. To take that point, I see
plastic electronics as a very obvious exemplar, but I am sure there are many
other examples. Around Q123 Chairman: We try! Professor Sir David
King: Winning is not
the point, and that is what I am trying to drive at here. Somehow we feel that we should not be backing
companies because this gives an unfair advantage. I know that within the rules of the game that
is correct, you are not supposed to give unfair advantage, but at the same time
are not the Fraunhofer Institutes giving German industry precisely that? It happens in the Q124 Chairman: Can I take one area where the Government does have some control, and that is over the whole procurement issue. The Government talks a very strong tale about using this procurement muscle, 150 billion or whatever it is, in terms of fostering and supporting British industry and its development. Do you feel that there is an avenue there, Sir David, to use that procurement to actually support these emerging technologies? Professor Sir David
King: Chairman, this is
a drum I have been banging on for quite some time. My example here was the development of the
electronic breathalyser. Some years ago
the Home Office put out an advertisement for an electronic breathalyser. There was nothing on the market at that
point, you had coloured crystals that you blew through, and a Welshman
developed an electronic breathalyser in his garage at home. His name is Tom Jones, but it was not that
other Tom Jones. He formed a company
round the development and wrote to the Home Office. The Home Office announced that they could not
procure his gadget without having competition from at least two other
manufacturers. At this point he had
patented the device. His company was
then bought out by an American group, prompted by DARPA, and DARPA then
procured the device and then the Home Office bought it from the American
company. I just give that as an example
of how we have lost out in the past, and it just seems to me that procurement,
wisely used, could really transform this whole picture. The Americans understand that: they have been
playing this game through DARPA for a long time. As I said, Q125 Ian Stewart: Does that not also indicate that in this country our government is good in terms of funding research and development but not so good in implementation funding? Professor Sir David
King: That is right,
but, Ian, what is interesting here is, we have already now got past first base,
to use an American term, and to second base.
In other words, we have got all these small high-tech companies, I
believe the highest density of small high-tech companies possibly in the world
down here in the south of Q126 Chairman: Can I broaden this out? Chris, you were nodding. The record will show that Chris Williams was nodding as Sir David King was speaking there. I suspect the whole panel agree - is that a fair comment - with Sir David's assessment in terms of the use of government procurement? Do you have a quick comment, any of you, to make on that? Mr Williams: I have 430 member companies that would ask me to say, "Hear, hear", to everything that Sir David was just saying. Q127 Chairman: Can I broaden this, Chris, to the issue of what else is happening around the world. Sir David has mentioned the United States, but if you take liquid crystal display and the amorphous silicon industry, both started here and yet the huge commercial exploitation occurred elsewhere. What are other countries doing, taking aside the United States? What else is happening in Europe, for instance, which is allowing these technologies to be fully developed? Mr Williams: Europe is working probably
in parallel with the general thrust of activities that we have in the Q128 Chairman: But in terms of plastic electronics, which countries are actually taking this seriously in terms of doing the very things which Sir David is saying that we ought to be doing in the UK? Mr Williams: Q129 Chairman: Nigel, huge opportunities? Mr Perry: I think so, but I think if
you concentrate on the end device, then we may be missing the story in its
totality. The reality is that the Q130 Chairman: Tom, very briefly please; I am running out of time. Dr Taylor: A couple of issues that were
raised just then. In the submission from
Dupont Teijin, they highlight a couple of good examples of where value is
extracted throughout the supply chain. The
Q131 Chairman: Tom, can I stop you there, because one of the things that I want to challenge you on is this notion that somehow large-scale manufacturing has to be outside of the UK. Surely one of the challenges to us, if we have emerging technologies, is not to accept that automatic premise that the large-scale manufacture must automatically occur somewhere else. Why can it not occur in Britain? Dr Taylor: I would agree with you. I support what Chris said earlier; that we
must overcome the perception (and I have picked that up sometimes within the
Civil Service system within the Chairman: You have made that point. Tim. Q132 Mr Boswell: I would like to go a little bit further back into looking at the array of research we have already got in place, because we have now gone well down stream but interestingly so, and really pick up a point that Sir David has already made implicitly when he talked about the south of England. We are not here wanting to start a hare in full about regional policy, but I am interested, in a way, as to the relationships between the centres of expertise we have got - the PETeC, Welsh Centre for Printing, and so forth - how they have come into being, where they are, whether there is, as sit were, an overall strategy for establishing a network of centres and what is the value-added in having centres like that rather than injecting them one way or another into the existing university provision? Is there somebody controlling this? Has somebody planned it? Have you sorted it out for yourselves or how have we got what we have got? Mr Williams: It is the desire of the TSB (Technology Strategy Board) that there should be a unified programme. Q133 Mr Boswell: So some of this would have come into inception at least before TSB got going? Mr Williams: Yes. It certainly was the desire of the DTI that
there should be a co-ordinated national activity. One of the risks that plastic electronics has
is that it is very easy to become totally regionalised, because one of the roles
that the KTM has, the UKDL, is to work with each of these centres of excellence
and bang heads to bring them together in a national strategy - so we now have PETeC
represented on the board of CIKC, CIKC represented on the Board of PETeC,
likewise with WCPC - so the regional centres are actually fully aware what each
of them are doing and how they can work together. I think we have actually created a multi-legged
support platform, and each of them have a specialty focus. To pick up the point that Mr Iddon has raised:
high volume manufacturing. The programmes
are funded to implement high volume manufacturing on reel-to-reel plastic, or
paper, or card in the Q134 Mr Boswell: And because they are regionally based they can plug into the local SMEs very readily. Mr Williams: Yes. Q135 Mr Boswell: So, realistically, you do all talk to one another, if I might suggest modestly, under your remit, Chris? Mr Perry: Absolutely. We talk each other, and it is willingly, it is not with our heads banged together, with due respect to Chris. Q136 Mr Boswell: In terms of plugging gaps or wanting to steer particular institutions in particular directions where they may already be inclined, who is running that? Is that you, Chris, in conjunction with the players? Mr Williams: In identifying the skills of
a particular centre or particular university, we have a responsibility as part
of our mandate to introduce to them industrial companies who have an interest
in those skills and resources wherever they are around the Q137 Mr Boswell: You are the clearing house? Mr Williams: Exactly. We are the technology marriage bureau. Q138 Mr Boswell: That is helpful. Can you bring into this bit of the equation (and all of you can, please, contribute) to the UK universities? A lot of them have got big research groups in these areas? Mr Williams: Yes. Q139 Mr Boswell: We have now created separate centres. How is the band being orchestrated altogether and to some extent is there a conflict between commercial considerations, including the potential of their own spin-off companies, for example, as against the overall benefit for the UK or the gap-filling that you are, presumably, anxious to achieve? Mr Williams: There is a tension inevitably, a mild commercial tension, but we are simply driving forward a programme of interest for UK PLC. So we try and overcome that by pointing out the benefits of companies working with universities, universities working together and looking then at the best way to exploit that in every possible way. Q140 Mr Boswell: If I were, hypothetically, in the position of having a good idea and maybe some pre-developed technology, you would be able to fit me up with the people I needed to get hold of? Mr Williams: Yes. Q141 Mr Boswell: There is a specific point to you Chris, and others may want to contribute. I think in your evidence you suggest that academics are often unable to access state of the art facilities. Richard Friend rather said the contrary. Maybe he can, but why is there this difference of view? I have set it up for you by saying, if I have got a good idea it is going to be all right, somebody will get hold of it and eventually, if Sir David works his miracle, we will have finance as well, but are there gaps here and how can we address them most effectively? How can we expose them and how can we then address them? Mr Williams: There are severe gaps in the
quality of resource available to universities around the Q142 Mr Boswell: I think you did mention that earlier, did you not? Mr Williams: Yes. It is really when they are looking to bid in
for project work and to create the industrial consortia to work with them. They can be extremely limited in terms of the
resources available to them, so it can very often be a self-fulfilling prophecy
that companies will prefer to deal with a Q143 Mr Boswell: Nigel, you wanted to come in. Mr Perry: I was going to make a point in the CPI context. What we discovered again when we looked at starting it up is that the skill-set that is required to actually do some of these things is different but complementary to the skill-set you find in universities? If you talk to industry, if you actually examine the market place, you will find this integrating role is needed, which is people pulling everything together. That is exactly what CPI is there to do. So the industry will talk to CBI; we will then talk to and engage with the academics; we then provide the assets, and so it is actually recognising where the skills are that are needed, what part of the chain you are in, what part of the process you are in. Putting large assets of the sort that we have going into PETeC into a university may not yield the results you want because you would then have to complement it with the skill-set that you would need to commercialise and drive the--- Q144 Mr Boswell: Specifically, if you need access to a higher grade facility, be it Cambridge or Manchester or wherever, in order to support a particular piece of development on behalf of one of the members or otherwise, are there levers that you can use, as it were, to bang heads together and say, "Do not sit on this kit. Make sure that it is available to somebody so they can then develop it"? Have you got some, if not sanctions, at least some fairly strong moral persuasion if necessary? Dr Taylor: There are always moral
arguments present and available, but there are two challenges for us. The first one is CPI is not an academic
institution, so we cannot be funded by Research Q145 Dr Blackman-Woods: I think these are questions probably for Tom and Nigel. PETeC is going to open later this year. What is it going to do? What facilities is it going to have and why will it benefit the plastics electronic community? Dr Taylor: We have been involved in
this endeavour now for four years. It
started in flexible electronics with a joint venture with Dupont Teijin Films,
creating what has been termed an open access facility. That is a facility that is shared with Dupont
Teijin Films and then shared with the rest of the population, and the PETeC
Centre has grown into an extension of that model. We received keys to the building last week
and it is currently being kitted out to open in September. It has been set up to provide as broad a
range of high technology, leading-edge capability as is possible given our
existing resources. We have been very careful
not to pick any one technology winner and not be too narrow, but to have as
broad a range of technology as we can afford, while at the same time starting
off with a focus. We have had to do
that, otherwise we would be diluted. Our
initial focus was on the display area, and that was informed by the
market. It was also informed by the
particular skill base in the north of Chairman: Okay, I think we have got a good flavour. Q146 Dr Blackman-Woods: What would you say to your critics who say you are putting all your energies into one production process: if that fails the PETeC is going to fail, that this is a dangerous route to go down? Dr Taylor: I would say that that is
misunderstanding the complexity of the situation. People see the very impressive roll
technology that we have assembled at Q147 Dr Blackman-Woods: What about Plastic Logic's assertion that PETeC has only a 50 per cent chance of success? Dr Taylor: Given the chances of success in a high-tech industry are often put at one in ten, I would take that as a compliment. A 50:50 chance, I think, says we are above the curve, and I believe we are above the curve. Our order book, our business development, is well ahead of the business plan that we assembled 18 months ago. We have seen more interest, we have been able to diversify our operation faster than we thought, we were able to achieve critical mass much sooner than we first thought. On the metrics that were set with the fund providers, with the bids that we won, we are ahead on those, so at the moment we are particularly confident about the business plan going forward. Mr Williams: Could I make one
comment? The review that was done of the
PETeC Centre last year was not done by Plastic Logic, it was done by Stuart
Evans and David Monk acting on behalf of UKDL, where we were invited to pass
comment, and they, very kindly, agreed to visit the very senior experienced
people in the UK with tremendous business acumen and were able to prepare a
detailed report that was submitted back through to PETeC and also through to us
at UKDL. We expressed concern at the
time that the business plan appeared to be predicated on focusing in the Mr Perry: Can I make a couple of comments? First of all, we are setting our stall out to be a better than 50:50 chance of success. There is a risk-management process, we do have a technology and industry advisory group that guides us, UK Lighting and Displays, amongst other people, at present on that so people are very fully informed and very involved in what PETeC is doing and how it moves forwards. Secondly, on the commercial sustainability issue and drive, there are a number of reasons for doing that, but, obviously, there is the sustainability issue. The RDA is keen that we reduce our dependence on them, quite rightly, but it is also very important that we prove our capability on the international stage. The way I would like to phrase it is that we can do more good for the UK by proving that we are genuinely internationally capable than ranked really as well-meaning, gifted amateurs grown up in the north-east of England. I think the international competitive pressure that we sense is absolutely crucial in setting the standards and setting the ambition to which the centre can and will operate. Q148 Dr Blackman-Woods: I am obviously very pleased that you are located where you are, because you are just outside my constituency, and I hope you are really successful, but we have had a previous panellist query whether it was entirely sensible to be located where you are. How would you answer that challenge? Why is it important that you are located at NETPark? Mr Perry: There has been a strategic
intent from the north-east to have an interest in printable and plastic
electronics in the region. There are a
number of significant initiatives which indicate that that is the right thing
to do. The Siemens' facility at (?) unfortunately
is now being closed down, but the skill-set in the region is also very
significant. So, driving forwards off that strategic intent, the RDA has been
very keen to establish the centre and it has followed on from that. The other point, you look at places like MIT
and Harvard, and you are very often given and pointed at those as good
examples, but having been there, the activity is within 100-mile radius of
Harvard and MIT. If you draw a 100-mile
radius around Leeds, you encompass an awful lot of the Q149 Chairman: Briefly, can you say whether you feel this is a good idea? Is it good use of government money to actually put in the PETeC centre and the Welsh Centre? Professor Sir David King: Briefly, yes, I do. Q150 Chairman: You would have more of it? Professor Sir David King: We need more of it. Absolutely. Q151 Chairman: It was not a foolish decision to put it in the north-east? Professor Sir David King: No, but there is a real question around that. A good decision, but the question I have is in terms of RDA support and the different levels of RAD support for different parts of the country. Is the distribution the right one? I understand the political need to see that there is a more even distribution of development around the country, but we might lose a few development arguments around the south-east, because the RDA is relatively poorly funded. So, when it comes to a competition, the south-east is going to tend to lose out. Q152 Dr Turner: PETeC is undertaking contract work for Samsung. Is this a harbinger of things to come? Is the plastic electronics industry about to go big in manufacturing in the Far East rather than in the UK? What other contract work have you got? Dr Taylor: I will just put it into
perspective. We are currently working
with 30 institutions, 23 of whom are in the Q153 Dr Turner: Does that imply that you do not see a prospect of large-scale manufacturing in plastic engineering in the UK? Dr Taylor: Not at all. The advantage of a sea-change in technology
is its levels of playing field. The
people out in Q154 Chairman: I am going to have to finish there because we have literally run out of time. There are a number of issues that we would like to write to you about, if we could. I wonder if we can finish this session, Sir David, by just asking you, as briefly as possible, to say what advice would you give to our committee for a recommendation in terms of this particular inquiry? What would you like to see us recommend? Professor Sir David King: I think each of the issues that we have been looking at and discussing this morning (but you have been hearing evidence for longer) inevitably lead to the conclusion that government needs to provide much more focus for this range of activities. We discussed procurement, and I would very much hope that you would look at the procurement issue. We have discussed what other countries are doing, the Fraunhofer Institutes, for example. I think you see a nascent Fraunhofer emerging here, and so my interest is for you to take as a committee plastic electronics as an exemplar of what we can do in other areas. It is building rather well here, it could go much faster, with more support and that procurement issue, but what are the general issues that arise in terms of British manufacturing from this high-tech sector? Q155 Chairman: On that note, can we thank you very much indeed, Sir David King, Chris Williams, Nigel Perry and Dr Tom Taylor. Thank you very much indeed. Dr Taylor: Chairman, could we extend an invitation to the committee to come and see us? We would welcome to give you written evidence, but we would be very welcome to show you--- Chairman: We are intending to come to see you in September, if you can fit that in.
Examination of Witnesses Witnesses: Dr Richard Price, Nano e-Print; Mr Stuart Evans, Plastic Logic Ltd; and Dr Keith Rollins, DuPont Teijin Films. Q156 Chairman: If I can welcome our second panel this morning: Dr Richard Price from Nano e-Print; Mr Stuart Evans from Plastic Logic; and Dr Keith Rollins from DuPont Teijin Films; welcome to you all. I wonder if I could start with you, Richard, UK universities have spun out a number of plastic electronics companies. What has made the university sector so successful in supporting spin-outs? What do you think the Government could do to encourage more of it? We heard from Sir David King that there is a huge number, it is probably the most successful nation in the world, but what more can be done? Dr Price: I think one of the reasons why the Q157 Chairman: Stuart, obviously Plastic Logic is an incredibly successful example of a spin out that has now gone off to Dresden as we were hearing a couple of weeks ago. What else do you think the Government could do to encourage that chain from very successful university science through to successful implementation in terms of successful companies? Mr Evans: The level of resources that goes into the core research seems to me
to be about right and the main message one would want to give there is that
that should continue and modestly grow.
I think there are three other areas where you could imagine expenditure
being useful. The first is in the whole
process of getting ready for manufacturing, and that was touched on a bit by
the PETeC guys; the second is building the factory, and the UK lost to Germany,
and we might talk a bit about why that was; and the third is putting it into
use, the whole role of procurement, SBRI and prototype projects. Just to deal with Q158 Chairman: We have dealt with that with Alan Hauser. Mr Evans: Indeed. I think in terms of customer readiness we are surrounded by paper. Electronic books and readers will be the first killer application in this space and I think it would be terrific to see government procurement initiatives to interact with our community so that you would have a single electronic book in front of you instead of all these pieces of paper you are about to throw away. Q159 Chairman: Keith, when I came up to Teijin Films some time ago, before this was even on the horizon, I had a very interesting visit there. Clearly you are a huge multi-national company. How do you interact with small spin-out companies? Is your main objective to gobble them up and suck them of their life blood so you can make more profit? Dr Rollins: No, I do not think that is the intent. Q160 Chairman: But is that the outcome? Dr Rollins: It is not the outcome either, no.
Can I apologise for my slightly casual dress this morning, having
returned from Q161 Mr Boswell: I am interested, as we have heard this morning, in the interplay between intellectual property and the various players who may or may not own that who claim it and other players who may want to exploit it. Clearly there is an interest, and you have just touched on this, in having a fairly open structure but on the other hand you are going to have bits that you want to keep to yourself. Conversely multi-nationals may, to follow the Chairman's formulation, want to collar not just the manufacturing and take things away to manufacture but collar the IP which then becomes no longer available in the UK. It sounded from the contributions that you three gentlemen have made so far that you were reasonably relaxed about this rather mixed economy at the moment. Is that the message we should be getting from you? Would any attempt, as it were, to intervene by anybody, whether it be TSB, the Government, or otherwise, destabilise and do more harm than good? Dr Rollins: Maybe just to qualify my comment about the openness, that was more in terms of our willingness to operate in different parts of the value chain to the ones we would normally occupy, because in this very immature industry it is very difficult to get established companies who perhaps have not recognised the opportunity here to invest and commit resources to develop the industry, so we have worked further down the chain, and part of the investment that we made in CPI four years ago was a strategy to allow us to do that. My comment on intellectual property is of course, like any technology developing company, IP is extraordinarily important to us. It is one of the critical reasons why people like 3M and Merck have a very good sustainability model in the LCD space, and clearly that is a model that any materials company will seek to develop. Mr Evans: As to IP arrangements between Plastic Logic and DuPont Teijin Films, that is dealt with by we buy his substrate and pay him money, and that is a straightforward kind of arrangement. We are all conscious of the need for a very broad ecosystem here because this is a big task and whether it is in the UK or other countries I think the public purse continues to play an important role in enabling some of that and if the UK chooses to do less of it then others then it will eventually suffer the consequences. Short term I think we are funding R&D research about right. Then there is the getting into manufacture which the PETeC guys and others are talking about and then there are pilot projects that take what comes out of the factories in Dresden and other places and put it on the desks of people like you guys. Q162 Chairman: Richard, is not the very purpose of your existence to encourage companies to actually go into the pockets of larger players? Dr Price: In terms of university spin-outs --- Q163 Chairman: Is that not what you do as your job? How do you measure success? Dr Price: You measure success by creating value and whether that is through an
exit of a trade sale to a large global player, through an IPO or through
generating sustainable revenues, there is a range of different options. When you go down the path of taking venture
capital you are more constrained in your choices there but it does not
necessarily mean that you are going to be acquired by a Samsung or Q164 Dr Blackman-Woods: Both Nano e-Print and Plastic Logic were spin-out companies based on venture capital. Did you look at any other funding possibilities, for example University Challenge funds? Was there anything else there or did you not look? Mr Evans: For Plastic Logic our ambition was always such that the level of
funding that it would take would be well beyond what was available initially
from those kinds of resources. To hark
back to what David King said, we are halfway through our journey. We have raised hundreds of millions of dollars
and one of the key things to avoid the company being acquired is that public
markets are opened. Some of our
investors will eventually want to sell their shares and that is entirely
reasonable but we do not want that to be a thing that forces the sale of the
company. It is really important that
whether it is on NASDAQ in Dr Price: We are at a much earlier stage in our journey having just raised $1 million rather than several hundred. Mr Evans: That is the hardest! Dr Price: It is the hardest and of course we looked at a range of different options for funding. It is very difficult to get that funding particularly at the early stage when essentially, because of the nature of this industry, there is still an extremely high level of risk, it is still essentially in a research phase, albeit industrial research, and looking at other sources of funding other than equity investment was almost impossible at the time. Q165 Dr Blackman-Woods: Richard, you mentioned earlier that you were getting funding from Technology Strategy Board. How important is that to your company? Dr Price: It is incredibly important for several reasons. Firstly, it brings together consortia that would not necessarily have come together unless there was government support to share that risk. Secondly, it helps us in terms of our cash flow and enables us to further develop before we have to go back to the market for more investment. It also helps us build relationships with some of the knowledge transfer networks and to grow organically some of our networks within industry. Q166 Mr Boswell: Just a little point, if I may, following this. Are you satisfied that there is adequate capacity in the UK for appraising these kinds of applications for funding for venture capital? I imagine for example if a small company were to go to a clearing bank they might have some difficulty in having a dialogue with them. At your sort of level and in your experience, is there somebody who at least knows what you are driving at and can give you if not necessarily the funding you require at least a sensible discussion about whether it is merited or could be considered? Mr Evans: If I were to respond to that I think it is entirely unreasonable to
expect clearing banks to be investing in plastic electronics at this
stage. We have generally found that
dialogues both with grant-making bodies like TSB or investors have been very
reasonable; and I would want to pay tribute.
In the Q167 Dr Blackman-Woods: So you would conclude that the TSB is doing something that is quite unique, it is not duplicating something that is being done somewhere else in the UK? Dr Price: Absolutely. I would echo Stuart's comments about European projects. They frightened the life out of us, quite frankly, with the complexity of the projects. They are just not appropriate for what we want at this stage. Q168 Dr Blackman-Woods: Would a reformed SBRI programme be helpful to spin-out companies in your sector? Mr Evans: Absolutely yes. I think there are two problems there. One is that this has been a promise that has been around for many years and those of us in the entrepreneurial community are extraordinarily sceptical about whether anything will happen; we await with interest. I think they play a really important role in enabling pilot projects and because they provide 100 per cent funding, which is completely different to any other regime, they permit little companies like ours and Nano e-Print to do some different kind of stuff, so it is a very welcome initiative and I do hope it progresses. Dr Price: If you look at the difference between, say, CDT in the Q169 Dr Turner: Stuart, Plastic Logic has gone down the manufacturing route as a business model rather than developing IP and licensing it. Why is it that you have done that? What is your rationale? Do you see that as a greater potential in profit in the future? Mr Evans: Absolutely yes. The journey
we have been on is quite interesting.
When we started the company we did view IP licensing as an attractive
business model, but one of the things that we realised as we developed the
company is that we were going to be first and we concluded that it was much
better for us to be first because it was a very attractive profit opportunity,
a very attractive opportunity to deliver great value and in our field - and you
say this carefully - it is only £100 million to build a factory whereas if it
is a 300-build silicon fab or Gen 8 Fab in Asia it is billions and billions of
dollars. Writ large the manufacturing
story is much more optimistic in the sector than you might imagine because you
would have lots of small facilities being very successful and competitive and
there is bound to be some in the Q170 Dr Turner: Richard, what model is your company going to adopt? Are you going to go to licensing or manufacturing? Do you think that one of the factors in it is the attitude of venture capital funders? Are they more like likely to be interested in funding an IP model or a licensing model or a manufacturing model? Dr Price: Like Stuart, we started off with a licensing hypothesis, but we have quickly moved away from that, partly because it is a very difficult model to implement successfully. There are few examples of it. ARM is the classically cited example of a successful licensing model but they spend enormous amounts of money on their business development activities, so it is very easy to underplay licensing and to assume that it is straightforward. It actually involves incredible amounts of investment and to have licensees that are committed to your technology and implementing that and manufacturing that for you to get a return on your investment. The model would be to develop products or product components and that is much more attractive to the VC market. They prefer to invest in products and something where there is more control over the risk than through a licensing model. Q171 Dr Turner: Do you anticipate doing your manufacturing in the UK or elsewhere? Dr Price: At this stage it is too early to say. We would very much hope to do it in the Q172 Dr Iddon: Keith, companies such as Merck Liquid Crystals, Chiso or Corning with the glass substrates have been highly successful in the LCD sector. Should we in the UK follow a similar pattern to that in this field that we are talking about this morning? In other words, are we going to be enablers or are we going to be producing devices? Dr Rollins: I think the attractive thing about the space at the moment, because
it is so early, is that all of those options are open. If you look at the materials history in the
UK, it would be astonishing if a range of companies did not participate in just
the way that Merck have done in LCD but in plastic electronics, so develop the
technology, develop products associated with that, and either export or
manufacture domestically closer to where device manufacture is taking
place. You would be surprised if that
did not happen. Almost certainly the
technology development and IP licensing piece is going to happen, again
traditionally a Q173 Dr Iddon: Stuart, we know full well the hows and whys of you ending up of all the sites you looked at, including one in South Wales, in Dresden - there was a can-do attitude there and the skills were there in that fine city - but do you think you will be able to use your products for assembly in Europe, in Germany in the Dresden area, or will you also be an enabling technology when you are manufacturing? Mr Evans: We are intending to have Plastic Logic be a manufacturer of
electronic readers so what we will make in the factory will be display modules
that will be assembled into complete readers probably with a park in Q174 Dr Iddon: It seems to me that the Asians have cornered final product manufacture whether it be a displaced screen in a satnav or a mobile telephone or whatever, and they are very reluctant to install manufacturing capacity in the West. Is that a big problem in this area? Mr Evans: What you see there is maybe slightly misleading. It is very interesting to see the way, for
example, the flat panel TV companies are doing more and more final assembly in
Eastern Europe and that is the net result of having anchors in Q175 Dr Iddon: When Keith Rollins told the Committee recently that you can develop technology in the UK and Europe generally but you have to manufacture in Asia; you would say he is wrong? Mr Evans: Absolutely and I do not know that he said that, did you? Dr Rollins: I do not think I did say that. I think what I said was this area offers the opportunity to break that paradigm. Mr Evans: The point is you will
manufacture everywhere because the product will be used everywhere and you are
not forced to have a small number of giant plants. All we have to do is want to and try hard and
we can have plastic electronics manufacture in the Q176 Mr Boswell: And it is worth being close to the market Mr Evans: Absolutely yes. Q177 Dr Iddon: I am glad we have qualified Keith's earlier comment. Dr Rollins: I think the other comment I would make to that - because in the
first session this morning there was a lot of discussion about barriers to
implementation is - I think one of the great advantages that the Asian
companies have because of the history of almost 20 years now of course is that in Tokyo, in Seoul, in
Taipei, in a 30-minute taxi ride you can jump into the headquarters of the
R&D centres for major electronic companies who are the supply chain
champions for those industries. The Mr Evans: If I could hark back to the theme you have asked about a couple of
times which is the decision not to have this managed programme. I do not think that really matters in terms
of the money because, by and large, government support financially has been
broadly what was anticipated in the managed programme, but it is a missed
opportunity to bring together the industry to lead itself into the future. I do not think that the PETeC guys are quite
engaged with the stakeholder community in the way that would be ideal. You have got a very powerful cluster around Q178 Ian Stewart: My interest is around skills and recruitment so the first question is are there skills shortages in relation to this in this work? If there are skills shortages, what can be done about that? Secondly, have you got problems recruiting in the industry? Do you recruit internationally and would you prefer local skilled workers? Mr Evans: We have got the most people so maybe I could respond to that. When we had nine employees, six were foreign;
when we had 20 employees, we eight nationalities. We thought that was fantastic. We thought that was really important but now
we are nearly 100 people in Q179 Ian Stewart: Can I just press you on that because that would be the next question. Would you prefer then graduates who had specific skills in plastic electronics or would you prefer graduates with more generalist skills? Mr Evans: For us we want people who are graduates with five, six, ten years' experience, so it is not so much what their first degree was, although obviously has to be some deeply technical degree, but when we hire them at age 28 or 30, we want them to have spent their time in the right industrial environment. We will do our bit to train them but that is where we would like some help. Dr Price: Stuart is right that in terms of the science for the core research
there are those skills available although we need to keep investing in
those. I know certainly the Dr Rollins: Obviously our company is a little bit different to Richard's and Stuart's in terms of we will recruit from traditional material science, polymer chemistry, physics and then a variety of brands of engineers, and we recruit generally from the UK, and that suits our needs very well, quite honestly. In answering the broader skills question, again it is important to think about what is the end point in this game; what is the model within UK plc because that will dictate the skills set that is required of course. So if the end point in terms of UK plc is PETeC-type scale, that dictates a certain set of skills sets and so on. It is always going to be very multi-disciplinary for sure and maybe does need to be multi-national as well. If you are going to get a German PV industry in ten years' time, then that is a large-scale manufacturing mind-set. It is a whole different skills set to the one that gets technology to a PETeC-type scale. I think you have got to answer that question before you really lay out the strategy that says what your people development part is to satisfy that need. Dr Price: Going back to Stuart's point about their first nine employees, out of our first six we had four different nationalities, so it is a similar pattern. Q180 Ian Stewart: Can I just move on to another aspect of training then. Would you prefer graduate training to include management skills or is that something you were saying, Stuart, that you would expect to do for yourself in the company? Mr Evans: I think that is quite valuable early on. In Dr Rollins: I think it is important the professional bodies provide some of that
training as well. The Royal Society of
Chemistry has a nice approach to that in which it delivers a mini general
management training programme, I would call it, with elements around the
finance, around project management, around people leadership, and I think that
is a pretty valuable approach because in some senses it is the sort of
programme that would have been delivered from some of the corporate
organisations that perhaps are not quite present in the UK in the way in which
they were at one time, and of course ICI is probably the highest profile
example of that. That produced a stream
of well-trained graduate and post-graduate scientists over a ten to 15-year
period some of whom would stay with that organisation and some of whom would
take those skills more broadly across the Q181 Dr Iddon: Do you think our electronics courses in universities are up-to-date? You are at the cutting edge of technology. Are they training people for your industry? Dr Price: Perhaps I ought to start there.
I think there is varying quality across the different universities but I
know certainly at Dr Iddon: Too traditional; is that what you are saying? Q182 Chairman: Nobody is listening, you can be as honest as you like! Dr Price: Slightly too traditional I would say. Dr Rollins: As a materials company it is not really something that we engage in too much so it is difficult for me to make any great comment on that. Q183 Dr Iddon: You mentioned the RSE; are you principally chemists or across the science base? Dr Rollins: I am a chemist by training but within the company we have a very multi-disciplinary group. Q184 Chairman: Stuart, are you happy with the quality of electronics engineers? Mr Evans: I would say that, broadly speaking, what you want is top-notch people with an excellent technical education, whether they do plastic electronics probably does not matter today; in ten years it will look old-fashioned, but it is not a problem now. Chairman: On that note, can I thank you very much indeed, Dr Richard Price, Mr Stuart Evans and Dr Keith Rollins, for your time this morning and thanks to my Committee. |