The UK economy is at a crossroads. New technology, new international relationships, new markets and new politics are all contributing to uncertainty for UK businesses. And this uncertainty, particularly around Brexit, is impacting UK manufacturers with the Q4 EEF/BDO Manufacturing Outlook survey results showing a downward trend across the key indicators.
The UK has a bold and successful manufacturing history and even today, it is the 9th largest manufacturing nation in the world, employing 2.7 million people and accounts for 45% of UK exports (EEF UK Manufacturing Facts 18/19). Manufacturing is a sector critical to the success of the UK economy – the Government and policymakers must do all they can to ensure that everything possible is done to create an environment where manufacturers can flourish.
To enable UK manufacturers to move in the right direction with confidence we need to see the emergence of a ‘new economy’ – an economy which helps the UK thrive post-Brexit by making the most of its mid-sized entrepreneurial manufacturers; businesses which we feel are too often overlooked and undervalued by policymakers.
We believe policymakers must focus on fuelling the growth of sector powerhouses like manufacturing, and our New Economy report suggests some detailed policies with a particular focus on helping the manufacturing sector grow.
At the centre of our policies is the urgent need to address Britain’s productivity puzzle and for UK manufacturer’s greater digital transformation is key to improving productivity.
The pace of change towards more automation, digitisation and 4IR (fourth industrial revolution) technologies over the next five to 10 years will be rapid and manufacturers will need to change how they do business to cope with the new digitised environment. The drive towards digitisation will require education, investment and strong leadership to keep pace with global competitors and meet the increasing demands of consumers.
When BDO first questioned manufacturers about 4IR processes two years ago, only 8% of UK firms surveyed said they had a significant understanding despite the majority recognising that the fourth industrial revolution would have a major impact on the sector. Time has moved on, yet UK manufacturing is still not getting the level of support it needs to realise the significant benefits digital transformation could offer.
We believe that the Government needs to do more to actively encourage innovation and digitisation and provide financial support and know-how on the implementation of 4IR technologies.
The ‘Made Smarter Review’ makes excellent recommendations that will help accelerate the adoption of digital technologies in UK manufacturing. In his 2018 Budget, the Chancellor committed up to £121 million for the Made Smarter programme and it is crucial the Government continues to commit to making the long-term investments outlined in this review.
We believe funding for the High Value Manufacturing Catapult and similar innovation centres should be increased to ensure sufficient resource is available to educate and advise manufacturers on how digitisation and 4IR technologies can impact their business, more importantly advising where to start and progress their digital transformation journey.
Tom Lawton, Partner and Head, BDO Manufacturing