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21 September 2017 | By Sarah Wood Insight

Manufacturing matters

This is a period of opportunity for UK manufacturers – if we get it right

The UK has a rich heritage in manufacturing from planes, trains and automobiles to whisky, pharmaceuticals and light bulbs, supporting jobs across the UK. And today manufacturing generates the lion’s share of exports, accounts for over two-thirds of all UK R&D expenditure and it’s driving productivity growth throughout the economy.

There remains plenty of opportunity for UK manufacturers to do more. Demand for goods labelled ‘Made in Britain’ is enjoying a peak not seen in decades. And if we secure the right trade deals in the years to come, all parts of the UK can benefit from this success.

Yet this is also a period of uncertainty. Ambiguity around Brexit negotiations, rising business costs and a rapidly changing political environment pose a risk to confidence despite good global economic growth – making it crucial that the sectors’ voice is heard.

Maintaining a competitive edge

This is why the CBI has established a new Manufacturing Council, chaired by Tom Crotty of INEOS. It will bring together manufacturers of all sizes and sectors to set an ambitious and exciting vision for the future of UK manufacturing. It will also tackle the challenges we face head on.

Let’s begin with skills. The sector employs around 2.7 million people at all levels, but the rise of artificial intelligence, the Internet of Things and Industry 4.0 means it is critical to ensure the workforce is fit for the 21st century. A driving objective of the CBI Manufacturing Council is to shape the skills agenda to ensure that schools, apprenticeships, colleges and universities provide people with the skills they need to succeed in a fast-moving global economy.

Innovation too is central to maintaining our competitive advantage. Developing and commercialising new ideas, as well as adapting to new technology will help to increase productivity growth. To this end, the CBI is working with business to map out how the UK can increase investment in R&D by 2025 to 3 per cent of GDP. The Council will look closely at how manufacturers fit into the picture: what this roadmap means for the way they invest, and what will encourage greater levels of investment.

Earlier this year the CBI responded to the government’s green paper on industrial strategy, identifying six recommendations that underpins a thriving economy across the UK. Manufacturing currently contributes £164.48bn GVA (9.8 per cent of total GVA). To improve this we must ensure that we have a visionary industrial strategy that works for manufacturers – supporting productivity and growth across the UK.

But we can’t talk about the challenges and opportunities the sector faces without talking about Brexit. Manufacturing accounts for around £228.9bn in exports, with 57 per cent of this going to the EU. Ensuring that we have a tariff-free, barrier-free trading relationship is crucial for supply chains, as is laccess to skills and labour from the EU, which all support a competitive manufacturing sector. The Council will steer the CBI’s work on Brexit as we work with the UK government to get the best deal possible.

The urgency on all of these concerns is all the greater as we compete to be an open, innovative and inclusive society. There has never been a more important time for the voice of manufacturers to be heard.

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