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The future of manufacturing

10 May 2016

New technology is ushering in the “fourth industrial revolution” – but how can the UK’s manufacturers make the most of the opportunities?

The UK’s manufacturing base may be shrinking, but it’s also undervalued. And by tackling its main barriers to growth – skills, energy and research and development – the sector has a significant role to play in making the UK’s economy more balanced, more diverse and more innovative.

These issues were under the spotlight at the CBI’s “Future of Manufacturing” conference, held on 5 May at the University of Warwick. And CBI director-general Carolyn Fairbairn led the charge by calling for a modern industrial strategy to help others achieve the same success as aerospace and automotive. 

“In many ways, our recent history is a ‘tale of two sectors’,” she said. “Steel provides a sharp example of where we didn’t think long term and where the answers didn’t come until it was too late.

“Yet the automotive industry provides the evidence that a clear, collaborative approach works.”

By listening to the “asks” from this industry, government has helped support investment in people, new technology and supply chains – leading to productivity that’s twice the national average, she went on to explain.

Speed of change

The urgency behind Fairbairn’s call – and the main focus for the day’s discussions – was laid out in the context of the digital revolution. And it doesn’t require a particularly long-term view to see the impact that digital technology is having – and will continue to have – on manufacturing.

Martin Donnelly, permanent secretary at the Department of Business, Innovation and Skills, said he was confident that the “fourth industrial revolution” would lead to new opportunities for UK businesses.

But he was also “very aware” of the speed of change, adding that government was committed to working with business. “We need to work ever closer and more deeply to find the structures that help,” he said.

The scale of the challenge is clear: the UK currently ranks 14th in the world for adopting new technologies, despite being the 5th in the world for the availability of digital.

“The UK punches above its weight on research, but we're a laggard in putting it into practice,” said Brian Holliday, managing director at Siemens Digital. “We need to move the focus from innovation to implementation.”

So how can firms make change happen?  

The most extreme suggestion of the day was sacking all manufacturing bosses to deliver a step-change in leadership and ambition.

And Sue Graham-Johnston, managing director, UK, Ireland and Africa at BOC, asked how many of the delegates had built their own app. “We’re part of the problem,” she said, adding that technology needed demystifying.

The right focus

There was also a clear emphasis on company culture. Lloyds Bank’s managing director, global transaction banking Adrian Walker spoke about it from the perspective of increasing firms’ appetite for risk, while others outlined the importance of engaging staff in the process. “People on the shop floor can know better,” said Rich Dale, chief executive at software firm Flowlens.

“We’ve made mistakes,” said Jonathan Duck, chief executive, Amtico, “but looking hard at the competition helps.”

“It’s not just about getting it right internally,” added Andrew Carr, chief operating officer, Digital Catapult, emphasising the need to collaborate to amplify the benefits. He highlighted the importance of learning lessons from different sectors. “Failing fast is ok, succeeding quickly is far better.”

There were calls for greater financial support for UK innovation to address the fact that the government’s contribution to the UK’s total R&D spend was the lowest of the G7 economies. More specifically, speakers and delegates alike wanted the government to expand Innovate UK’s Catapult network, where funding is currently being squeezed despite proven results.

Talking from her experience in her native Silicon Valley, Graham-Johnston also argued that there should be more open innovation events and transparency from business around the kind of developments they are looking for.

And, picking up on the issue that too high a proportion of UK innovation was not translated into industry, Sir Michael Arthur, executive chairman at Boeing UK, highlighted that working with the supply chain helped ensure the innovation efforts of smaller companies were focused on something larger firms can actually put to use.

Enthusing the next generation

But the discussions were never far away from the issue of skills.

“Automation requires very different skills,” said Charlie Overton, manufacturing business office director at Jaguar Land Rover, asking for government’s help to push those through the system. And Arthur agreed, saying the company was hiring more IT and systems engineers than people capable of building helicopters. 

Worries circulated about design and technology being marginalised in schools, and there was also concern about the persistent negative reputation of manufacturing affecting the numbers interested in a job – or apprenticeship – within it.

But concluding the day, manufacturing “rock star” and founder of the Warwick Manufacturing Group Lord Bhattacharyya said; “We should stop complaining and do what’s best: innovate”.