Can the UK be a global digitalisation leader?

Posted on 14 Nov 2017 by Jonny Williamson

The German British Forum’s 26th Conference took place today (14 November) at the Liverpool Town Hall, with an esteemed line-up of speakers exploring what digitalisation means for the future of work.

Digital technologies are transforming manufacturing processes and supply chain communication.
Digital technologies are transforming manufacturing processes and supply chain communication.

It goes without saying that the digitalisation of manufacturing – largely regarded as the Fourth Industrial Revolution (4IR) – will have an impact on global economies, creating winners and losers as a result.

Almost 150 members and supporters of the industrial, logistics and education gathered together at the German British Forum Conference 2017 to debate the highly complex questions digitalisation poses: interoperability and global standards, trade treaties, data ownership and economic wealth metrics to name but a few.

Unfortunately, time may not be on our side, with the digitalisation of industry already well underway and our international peers have already reacted. Sales of “Industry 4.0 solutions” in Germany will increase by 20% by the end of 2017, according to Dr Peter Ammon, German Ambassador to the UK.

He continued: “More than 25% of German businesses describe themselves as ‘highly digitalised’, and over half of German industrial companies employ at least one Industry 4.0 solution or technology.”

Yet, digitalisation is not just an industrial problem, it will also have significant social, economic, political and global ramifications.

Will society prosper or decline?

4IR is best thought of as an ever-growing and evolving set of systems, equipment, software and know-how.
4IR is best thought of as an ever-growing and evolving set of systems, equipment, software and know-how.

De-industrialisation caused by the previous (Third) Industrial Revolution ruined entire communities and regions thanks to globalisation and a drive to offshore production to lower labour cost nations, noted Chuka Umunna MP.

“At the dawn of the Fourth Industrial Revolution, one thing is certain, the future of work is going to be volatile and insecure. Digitalisation promises boundless opportunity alongside an equal amount of disruption,” he noted.

“We have seen more change in the past 30 years than in the past 300, and 90% of the world’s data was created in the past two years. Technology may well be the most significant factor shaping jobs and salaries of the future.

“Yet we don’t want shiny new technology in a run-down, failing country. Technology has a duty to benefit society, not detract. So, our challenge in Britain is to make work better; people are at the centre of that. What will be of value tomorrow is what has lost its value today, i.e. emotional, innovative human intuition.”

Adoption isn’t enough

It was a theme picked up by Juergen Maier, chair of the independent, industry-led Made Smarter (formerly Industrial Digitalisation) Review. He commented that the key to digitalisation success wasn’t simply to adopt 4IR technologies, but to also create them and use them to drive innovation.

Juergen Maier, CEO - UK & Ireland, Siemens.
Juergen Maier, CEO – UK & Ireland, Siemens.

“There is no doubt that the UK has the intellectual capability and prosperity to adopt, create and innovate. We have great knowledge sources, world-class universities and collaborative ecosystems,” Maier said.

“However, as a nation we’re adopting 4IR technology pretty badly. Just 8-15% of industrial companies are on a digitalisation journey. We do far better on the innovation side, but we just don’t scale it up effectively.

“You need only look at the relatively few start-ups, applying machine learning, artificial intelligence or augmented reality, for example, to an industrial setting, as opposed to e-commerce or gaming.”

Interestingly, Maier argued that the UK shouldn’t focus its efforts on merely becoming “another Germany”. There may be key learning points we can take from our European neighbours, but “to try and replicate German scale wholesale would be flawed”.

The UK needs to retain its key competitive advantage, i.e. an agile and flexible workforce working alongside robots, automation and machine learning, such as within the UK automotive industry, and apply the practices more broadly.

Automation encompasses more than just robots

On the subject of automation, Steven Brambley, chief executive-elect at GAMBICA – the UK’s trade association for instrumentation control, automation and laboratory technology, made an interesting point.

He noted that many people use automation and robots interchangeably, wrongly thinking that one means the other. However, robots represent as little as 5% of automation, with much of what automation includes remaining unseen – even from those who may use it daily.

Digitalisation Interconnected Systems Manufacturing Robot Automation Stock Image
Robots represent as little as 5% of automation, with much of what automation includes remaining unseen

According to Brambley, digitalisation sits at the heart of what GAMBICA does: “Digitalisation will displace some tasks and jobs, but it can lead to new jobs being created.

This has been borne in every previous technological cycle; computerisation hasn’t led to mass-unemployment. The UK is well positioned to benefit from the positive impact of digitalisation; but, doing nothing is simply not an option.”

In terms of the upsides, Brambley pointed to previous waves of technology-driven disruption and suggested that digitalisation would create new roles that didn’t exist previously.

It would also, he said, allow businesses to become more productive and internationally competitive which in turn would drive growth and lead to a need for more existing jobs. For every job created in industry several more are created in the supply chain (by a factor of 3 -5), and it could fuel the current wave of reshoring thanks to the need for localised, flexible production located closer to the market with shorter lead-times.

New way of working, but what does that mean?

The Airbus A330neo takes off for the first time. Image courtesy of Airbus.
An Airbus aircraft takes off or lands every 15 seconds with 25,000 daily flights.

The opportunity to become more productive and internationally competitive represents a tantalising prospect for any and every business, and it’s certainly top-of-mind for Mark Howard, head of research and technology at Airbus.

Air traffic has consistently doubled every 15 years and the $2.7 trillion global industry supports some 62.7m jobs. An Airbus aircraft takes off or lands every 15 seconds with 25,000 daily flights. In its first 19 years, Airbus produced 1,000 aircraft. In the past 19 months, the French aerospace giant has produced the same amount – a clear demonstration of how its ramped-up manufacturing.

Innovation, according to Howard, drives Airbus, having wracked-up a substantial number of industry firsts in terms of both process and product. Digitalisation is the key enabler, he added, but challenges undoubtedly exist – both internally and externally.

Alongside empowering and engaging people, secure systems of working, and data standards and protection, Howard noted that the UK needed to create a far greater pool of future talent related to data. “The new skill which will be – indeed are – in high demand revolve around finding data and then interpreting, utilising, sharing and enriching it using IT and the internet,” he explained.

Can we teach old dogs new tricks?

Terry Scuoler, CEO, EEF
Terry Scuoler, CEO, EEF.

So, what are the next steps for individual businesses, industries and the UK as a nation? With digitalisation touching on so many aspects of society and bringing disruption to almost every market, how can we overcome our historic inertia and generate genuine, widespread momentum?

Collaboration and partnerships, according to EEF’s outgoing CEO, Terry Scuoler. He noted that 12 out of the 13 recommendations made in the Made Smarter Review involve working with other companies, organisations and bodies.

Scuoler’s discussion reminded me of a comment I heard last month at a recent conference: whether you choose to view it as an opportunity or a threat, the disruption created by digitalisation is so significant and far-reaching, then no one nation or business can hope to achieve everything by themselves – and surely not if they want to be best in class.

Many agree that greater collaboration represents the best way forward, it would appear. Let’s hope that sentiment translates into action, and swiftly. Time is certainly not on our side.