Despite multiple challenges facing the sector, British manufacturers are pioneering the global shift to net zero and many have been quick to begin their journey to decarbonisation.
At last week’s Siemens Transform 2022 event, MakeUK CEO, Stephen Phipson, discussed the results of the organisation’s recent Decarbonising Manufacturing – Challenges and Opportunities survey and how Britain is forging a path for others to follow.
Stephen highlighted the fact that manufacturing is from time to time, spoken about in fairly negative tones within the mainstream media, so it is worth remembering just how valuable manufacturing is to the UK economy. It represents £183bn of gross value added in the UK economy, is a little over 12% of GDP, employs two and a half million people, and the average salary in the sector is 35% above the national average. Manufacturing also represents 65% of R&D investments in the UK.
SP: We commissioned this report as a stock check on where the sector is on decarbonisation. When we ran the survey around two years ago, a mere five to six percent of organisations were on that journey. We’ve made significant progress since then. When I talk about decarbonisation to chief executives of manufacturers around the country, large and small, it’s in two different terms.
One is from the perspective of improving internal processes to net zero our factories, the other is the opportunity. Over the last three or four weeks, I’ve spent a lot of time with ministers travelling around the UK and being inspired by some of the enormous investments that are taking place. Whether it’s monopile manufacturing in Teesside, carbon capture usage and storage plants in the Humber area, or new Giga factories on EV production, we are leading the world in decarbonisation.
A shift in focus towards decarbonisation
Eight out of ten manufacturers within our membership are now saying that decarbonisation is a high or medium priority in their business. That’s a massive change from where we were not that long ago – 46% of manufacturers are in the process of already implementing plans in their factories to move towards decarbonisation.
Cost competitiveness is a worry and I think it’s worth mentioning the current economic situation in manufacturing because it’s not good. I’ve been in the sector for 40 years and I’ve been through many of these events before so it does feel like déjà vu. But one thing I’m always confident about, because I’ve seen it before, is we’ve always come through. Manufacturing is the most resilient sector we’ve got in the UK; it always transforms, it always delivers, it always reinvents itself, and decarbonisation is one of the opportunities to do that.
For other issues such as supply chain, where there are now difficulties in sourcing components from Asia, we see a huge opportunity to bring manufacturing back into the UK. And that’s going to grow our sector substantially.
Much of the driving force of change is around cost of course; people are worried about the high price of energy. So that’s been a real impetus for people to look at this in their businesses, and how they use digital technologies which can help enormously in terms of the efficiency of factories, processes and delivering on that energy efficiency agenda. On top of that organisations are looking at different ways of coping with energy reduction in their factories. We have great examples of factories, admittedly larger ones, that will be coming off the grid next year and becoming energy self-sufficient.
One of the barriers that we see is access to finance, and organisations can find it difficult to get capital for some of these projects. Some can payback quite quickly, within five years for example, but some are 20 year projects which will require patient capital and a different financing approach. That’s something government can fix with the right incentives.
Another huge challenge around decarbonisation that comes out strongly in this research is the skills agenda. We’ve gone from a skill shortage to a labour shortage and we are obviously speaking very clearly to government about how we try and address some of those issues. On top of that, many smaller companies have revealed to us that while they’d be keen to deploy decarbonisation technologies, they don’t know how, and are not sure where to get help, training or further information on how to follow a decarbonisation process in their factory.
Unfortunately, many of the discussions with government are longer term, and what many manufacturers want is to see things happening quickly. We’re therefore very pleased to see the progress made in this report.
I’m confident about one thing, manufacturing is resilient. We get through problems, we will evolve and change. We’re already seeing manufacturers waking up to the opportunities of decarbonisation, and when I see the scale of investments and the country leading the charge in this area, it makes me very proud to represent this sector.
Stephen Phipson CBE has been CEO of Make UK since joining in 2017. Stephen previously spent five years as a senior civil servant holding the position of Head of the Defence and Security Organisation within the Department for International trade delivering export support to UK defence and security businesses and prior to this Stephen held the position of Director for Security Industry Engagement within the Office for Security and Counter Terrorism at the Home Office.
Before serving in the UK government Stephen spent 35 years in senior roles in the manufacturing industry including 15 years with Smiths Group plc as President of Smiths Detection where he was awarded a CBE in 2010 for services to the security industry. Stephen has worked extensively abroad in high technology manufacturing businesses and started his career as an engineering apprentice with the Plessey company.
To view MakeUK’s Decarbonising Manufacturing – Challenges and Opportunities report Click Here