ANALYSIS & OPINION
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What would Britain's exit from the EU mean for the photonics industry?

Dr John Lincoln, from the UK's Photonics Leadership Group, the EPSRC Centre for Innovative Manufacturing in Photonics, and consultancy firm Harlin, gives his opinion on whether Britain should remain part of the European Union, and how this could impact photonics

Photonics is a truly global industry at all levels. In almost all areas of our industry – in sales, markets, supply chains, sources of technology – photonics does not see borders. There are countless examples, from data storage to material processing, where a product starts life as semiconductor wafer, or other high value component, that is fabricated in the UK, packaged in Asia, and integrated into a system in Germany, North America or even back in the UK. There are even more examples where those photonic systems are then deployed in manufacturing facilities throughout the globe, from semiconductor fabs and cutting-edge consumer electronics factories, to giant automotive plants.

The first sales of many UK photonics companies are exported to Europe, USA or China. I like to say photonics companies are born global. Breaking the traditional mould of building local sales, expanding nationally, and then exporting, photonics products are created thinking of international customers at the outset, and retain this global view as they grow. Most UK photonics companies export 75 to 95 per cent of their output, compared to an average of just 34 per cent for the rest of UK manufacturing1. This shows how unusual photonics is; for many, it is what motivates us to get up in the morning, but it is apparent that the international viewpoint of what photonics takes for granted is not omnipresent in other sectors.

Graph showing photonics export contribution relative to the rest of UK manufacturing. Credit: UK Photonics Leadership Group (https://goo.gl/JajRph)

This international trade in photonics is a natural and direct result of the enabling nature of photonics. Photonics makes the difference to so many products – from mobile phones to cars – and is valued by consumers, manufacturers and product developers across the globe, who seek out the very best photonics to put in, or assemble, their latest creations. To be the best, and compete on the global stage, consumer-facing companies need the best, and without the best photonics, those new products would not be competitive. 

Over the last 50 years, the globalisation of consumer products – and other key application areas such as healthcare equipment – has taken place, alongside the rise of photonics. Which caused which is no clearer than which came first, the chicken or the egg. The result, however, is clear: global end markets mean that the same – or very similar photonic products – are sold to multiple, competing or collaborating companies, for embedding in, or manufacturing, final products in multiple global locations, no matter their source location.

For once, it helps that the photonics content is often hidden, embedded within the product or process, meaning nationalism or protectionism is less likely to impact the choice of supplier. Quality, price, service, performance and, most importantly, benefit-added are more likely to determine supplier choice. Of course, some areas of the world are associated with certain product traits – for example reliability, innovation, costs and so on – but this is due to reputation for the required attribute, rather than location itself. This makes photonics close to an economist’s ideal market, where free trade benefits and grows the market for all participants.

However, the more perfect the model, the greater the sensitivity to disturbance and disruption. Since photonics thrives on a global market place and free trade, anything that hinders that free trade reduces the photonics market. This is true of regulations such as ITAR in the USA, and is equally true should the United Kingdom leave the European Union. A Brexit would cause inexorable damage to the photonics market; not just in the UK, but globally.

No matter what trade agreements could be reached, all sides agree they would take time to negotiate. Whether that is two years or five is irrelevant, both are an eternity in an industry that is developing and growing three to four times faster than the rest of the economy. Faced with such uncertainty if Brexit occurs, businesses will make supply chain choices with less risk, which will hurt UK photonics exports, but also results in geography gaining just that little more weight in purchasing decision relative to excellence everywhere.

I therefore hope the UK remains firmly part of the European Union, working with our friends and colleagues across the continent and the globe. However, it is also prudent to plan for all eventualities. Fortunately, thriving in the face of adversity is an inherent British trait and the photonics trade has already proven to be vibrant, not just within existing trading blocs but between. Should the UK vote to leave, the natural reaction of UK photonics industry will be to further improve their excellence in order to outweigh the uncertainty of future trade arrangements. The global world of photonics is not a roundabout one can easily get off; indeed it is likely to only grow stronger, as our technology becomes critical to an ever rising number of essential products and services. Therefore, no matter the result of the vote on 23 June, I look forward to seeing photonics in the UK, and internationally, continue to grow, buying and supplying light-based technology of all types on a global scale.

References

1 Office for National Statistics, TOPSI: Manufacturing Export Turnover 2015 

Further information 

Harlin 

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