British manufacturers are continuing to enjoy a surge in performance on the back of a synchronised upswing in global markets according to the latest second quarter survey from EEF, the manufacturers’ organisation and BDO.
The Manufacturing Outlook survey results present a very positive and exciting picture for manufacturing and shows increasing orders in both home and export markets across a wide range of sectors. Manufacturing is a driving force of growth in the economy; contributing jobs, investment spending, cutting edge research, world class brands and significant revenues. But it seems that manufacturing is still not seen as a critical sector in the economy and this needs to change.
At BDO we believe that a ‘new economy’ is needed which understands and makes the most of the UK’s talents, skills and entrepreneurial spirit, putting the UK’s mid-sized manufacturers at the heart of its thinking.
To create a truly sustainable and balanced ‘new economy’, policymakers must focus on fuelling the growth of the UK manufacturing powerhouse 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 creating an environment which encourages innovation and digitisation, especially now as we’re seeing the increasing potential of the fourth industrial revolution (4IR). The lack of a strategic approach from the Government has meant the UK has been left behind competitor countries – such as Germany.
Over the last decade, the German Government realised something had to be done for the manufacturing sector to remain competitive. Its answer was a highly integrated project – launched in 2011 by the Association of German Engineers under the banner ‘INDUSTRIE 4.0’ – to develop and market a wide suite of technologies to affect a step change in manufacturing productivity and enabling ‘future proof production’.
It was a smart move for Germany. Here was a way to save manufacturing in the country, where manufacturing represents some 22% of GDP. The approach provided a solution to the growing need for lower cost, faster production and increased customisation of mass produced products using digital technologies. Germany (and may other countries) seem to have embraced 4IR more than the UK and this is a potential threat.
The pace of change towards more automation, digitisation and 4IR processes over the next five to ten years will be rapid. UK manufacturers will need to change how they do business to cope with the new digitised environment. The drive towards automation will require education and investment to keep pace with global competitors and meet the increasing demands of consumers.
Britain’s historic strengths in manufacturing, innovation, design and service, as well as the significant potential that the move to more automated manufacturing offers, should be supported and developed as key foundations for a successful and well-balanced UK economy.
We believe the Government should make available a dedicated fund to support investment and encourage the adoption of Industry 4.0 processes within the manufacturing sector.
In addition to this, funding for Innovate UK and HVM Catapult should be increased to allow sufficient resource to educate and advise manufacturers on how Industry 4.0 is developing and how it’s applicable to their business and the benefits this would bring.
4IR might not be “a revolution” but is certainly an important game changer. The Government should demonstrate that it understands the importance of 4IR for manufacturing and the UK economy as a whole.
Tom Lawton is Partner and National Head of Manufacturing at BDO.