The UK automotive industry has called on government to support the sector’s future competitiveness by putting digital manufacturing at the heart of its industrial strategy.
The UK could miss out on a £74bn opportunity over the coming two decades if it fails to embrace digital manufacturing, according to a new report published this week by the Society of Motor Manufacturers and Traders (SMMT).
The Digitalisation of the UK Automotive Industry, commissioned from KPMG, examines the future of digital manufacturing and outlines the benefits for the industry, consumers and the wider economy, as well as highlighting the potential challenges the UK sector must overcome.
Alongside the ongoing development of ultra-low emission and connected and autonomous vehicles, the transition to digital manufacturing arguably represents the biggest step change for automotive manufacturing since the introduction of automation in production lines in the 1960s.
New technologies such as intelligent robotics, 3D printing and artificial intelligence, combined with new approaches to data management, will help manufacturers and the supply chain to save time, boost productivity, reduce waste and costs, and respond more effectively to consumer demand.
Technologies such as these could also help reduce plant maintenance and machine downtime, enable faster product planning and more accurate forecasting of customer needs. Customers, meanwhile, will enjoy greater levels of personalisation, more product content and connectivity, more responsive service and even shorter waiting times for new models.
By embracing digital manufacturing, the automotive manufacturing sector as a whole stands to gain £6.9bn every year by 2035, with a cumulative benefit to the wider economy of some £74bn. This is a significant prize, the report notes, but there are several challenges to be overcome by industry and government, if it is to be realised.
The UK’s digital infrastructure needs to be improved, the skills gap addressed and investment in digitalisation accelerated, while clear policies on cyber security and standards for data sharing must be developed to promote trust.
With other nations already taking the lead, SMMT is calling for government to support this work and ensure the UK remains a major global manufacturing destination, by putting digitalisation at the heart of industrial policy.
SMMT chief executive, Mike Hawes commented: “We may only be at the beginning of a new industrial era, but with innovation and continuous improvement part of the automotive sector’s DNA, we are well placed to embrace the opportunity.
Significant capital investment will be necessary and we must put digitalisation at the heart of the UK’s industrial strategy to ensure we are equipped with the right skills, infrastructure and standards. The competition from other countries is intense, so we should follow the model that is proving so successful in the development of low emission and connected and autonomous vehicles in the UK, with a collaborative approach between government and industry.”
EU car tariff threat
Speaking at SMMT’s 100th Annual Dinner earlier this week, its president, Gareth Jones, underlined the industry’s recent impressive growth, but outlined the risks to investment and success if the benefits of the single market were lost.
New SMMT analysis suggests that EU tariffs on cars alone could add at least an annual £2.7bn to imports and £1.8bn to exports. Import tariffs alone could push up the list price of cars imported to the UK from the continent by an average of £1,500 if brands and their retail networks were unable to absorb these additional costs.
UK car makers are on track to set a new record for exports and beat the production volumes achieved last year, the president warned, however, that this success was the result of multi-billion-pound investment decisions made years before the EU referendum was even a prospect.
The industry’s fundamental strengths, including one of the world’s most highly skilled and productive workforces, will stand it in good stead to face challenges, but success cannot be taken for granted.
Jones explained: “The renaissance is down to years of hard work, hard won investment and long-term collaborative partnership between industry and government.
“We operate in an intensely competitive environment. We need to create the right conditions for future competitiveness, for developing skills and securing the strength of our economy by investing in R&D, and enabling new technologies to be developed here in the UK.”
Commenting on the strength of the relationship between government and industry, not least through the Automotive Council, Jones added: “The government has – commendably – put industrial strategy at the heart of business and the department for business.
“It does so as it faces its toughest challenge – leaving the EU. We must make the right decisions: on trade, on regulations and on business competitiveness.”
He concluded that SMMT members list membership of the single market, consistency in regulations, access to global talent, and the ability to trade abroad free from barriers and red tape as vital.