The Manufacturer Editor, Joe Bush, recently caught up with Managing Director for Siemens Digital Industries, Brian Holliday, to get his views on what’s been a busy time for UK manufacturing while looking ahead to the General Election and the future beyond.
There is no doubt that manufacturing has received some positive news over the last six months, with pledges of further investment from government and the Advanced Manufacturing Plan giving the sector a boost. There has also been something of a political consensus around the importance of manufacturing.
Indeed, Brian, commenting ahead of the impending General Election, noted that it’s been some time since he’s seen such clear alignment in political thinking around the sector’s importance. This was emphasised by the addresses given at the Make UK conference by both Nusrat Ghani, former Minister of State at the Department for Business and Trade, and her equivalent from the other side of the political divide, Jonathan Reynolds.
“You don’t get the sense that a Labour government, should they be successful at the general election, would unpick or undo what has recently been put in place, which has been a very positive development for the sector,” said Brian. He added that the Autumn Statement in particular, has been a highlight with full capital expensing, the continuation of Made Smarter funding and a pledge of £50m into engineering apprenticeships – all of which are positive drivers of change.
The sector was given a boost at the end of last year with the announcement of the Advanced Manufacturing Plan and significant investment from government. What does the outlook for the sector look like?
BH: 2023 was clearly difficult and challenging for manufacturers for a number of reasons – energy costs, shortages of components, supply chain disruption and staff shortages. Many of the manufacturing companies we’re speaking with have been concentrating on how to respond and become more resilient. Manufacturers are a pretty robust bunch that are used to accommodating different challenges in manufacturing supply and demand, and they’ve really stepped up when it comes to supply chain.
Some of the boosts that we saw in the autumn statement are really helpful, active interventions from government. They’ve picked a couple of specific sectors – auto and aero – which are both large and have long tails in terms of supply chains.
Therefore, that focus encompasses a lot of the manufacturing sector. We’re also seeing more interest in accelerating conversations around the use of digital technology, because it’s a way to mitigate higher energy costs and low staff availability, and can also optimise industrial processes and supply chains.
It will be interesting to see if those stimuli we’ve seen from government will help with some of the longer term programmes that are in place, such as the catapults, to help companies who are thinking about investing. And of course, if we’ve got interest rates that are also looking healthier, along with full capital expensing, then there’s every reason to think we’ll see more of an uptick in investment, sitting alongside an uptick in demand.
The sector has been crying out for an industrial strategy for some time. Are these announcements a step in the right direction? And what more needs to be done to make this a reality?
They are undoubtedly good news, but in truth they fall short of being a true industrial strategy. I think most manufacturers would envisage an industrial strategy as something that would survive successive parliaments. So, calling for something that’s been set up by statute or council would in essence help manufacturing focus on the longer term. In addition, there’s clearly a lot more that needs to be done to link industrial strategy to decarbonisation. Productivity has been our focus over the past 15 years to help sectors be more cost competitive. However, the new imperative is very clearly decarbonisation linked to digitalisation; the latter enabling the former.
There would, in my view, definitely be political capital in linking manufacturing more to levelling up; the idea that high-value manufacturing jobs could be created around the country. For me, an industrial strategy would be inherently linked to that and dedicated to how our regions could be economically boosted by distributed advanced manufacturing investment.
Manufacturing has faced many challenges in recent years and further issues arose in 2023 with inflation rates and disruption in the Red Sea. What’s been the impact on manufacturers and how are they responding?
I think all manufacturers will be watching the geopolitical developments in the Middle East very carefully. Through my contact with manufacturers, either through Made Smarter or directly with Siemens, I’ve yet to see or hear of any widespread impact from that disruption as yet.
Manufacturers are pretty resilient to disruptive change, and are presently investing in ways that will help to maintain that ability to produce product and meet customer demand. I haven’t seen evidence of reshoring as a result of those disruptions, but we’re naturally seeing more focus on investment in manufacturing in the UK.
We’ve had some really high profile announcements from companies such as Tata, BMW, Nissan and Airbus. This is brilliant news and Siemens continues to look at the UK for significant investment in our manufacturing capability. It’s not reshoring as such, but I do see a shoring up of our resilience and ability to make things consistently in the UK; aided by technology, where digitalisation is essentially an underpinning driver of those new investments.
Is there a danger that prior commitments will be mothballed as focus shifts towards the General Election?
I feel confident (particularly being at the Make UK conference and having had the chance to ask the question directly to Jonathan Reynolds), that manufacturing is unlikely to be used as a political football in the coming weeks, and there appears to be a consensus around the importance of the sector.
Of course, it employs over two and a half million people and it’s in growth – we’ve just overtaken France in terms of manufacturing output last year and we’re now the eighth largest manufacturing nation in the world.
If you unpick the Make UK figures, you can see the UK is actually doing well, so I think political parties of all colours will be supportive of growing the sector. And in particular, we’ve got those big imperatives – we need to grow and take a leading position in technology (AI has featured as a central narrative for the main parties).
We’ve also got to achieve net zero. Manufacturing represents a significant proportion of carbon emissions, so we’ve got to play our part – and that means a government level conversation with industry to make sure we get that right. It’s imperative that we put manufacturing into focus, and that we continue to find ways to invest and innovate to save the planet, one factory at a time.
Despite challenges, Make UK research has shown a returning confidence in the sector with investment in new products, expansion into new markets and an acceleration in the use of new digital technologies. Is this something that you are also seeing?
The biggest difference between the sector now, when compared with five years ago, is we are increasingly seeing companies showing an interest in technology such as digital twins, i.e., digital designs of products, simulations or verification of processes. That’s been accelerated on the back of the acceptance that we can work remotely (a legacy of the pandemic) and how we can make use of digital tools.
There’s an acceptance that more progress can be made and we can accelerate the time it takes to design and make products through digital tools. The UK also has the benefits of relative political stability, central time-zone, good education base and growing innovation confidence with respect to digital technology. The idea of Industry 4.0 is over ten years old now but it’s evident technology can still help us to thrive in a mature and relatively high-wage manufacturing country across our diverse base of firms.
Manufacturers are faced with the ever-present challenge of net zero, and increasing legislation and looming targets is making the issue more prominent. What does the current landscape look like for UK manufacturers and is enough being done?
The Siemens and Make UK joint report in 2022, found that nearly half of manufacturers had a decarbonisation plan and had already started to execute on it. That is certainly encouraging, but if I observe the sector and ask, as someone working at a technology company in this space, whether that has really happened at scale? I’m not so sure, and I genuinely believe we could do more.
I’ve alluded already to the fact that the policy instruments in government could be more aligned around productivity and energy efficiency in particular, but there’s so much more we in industry can do to get the basics right.
This is why initiatives like Made Smarter are so important – whose experts can tangibly help firms to innovate – firms that might go on to work with one of the UK catapult centres too. However, getting the basics right to achieve net zero means reducing the energy that flows through motors; using control systems to switch machinery off or optimise its energy consumption; extracting and exploiting data through cloud technology to compare one factory or process with another and correlate process to product quality; using automation and robotics to reduce waste. In addition, quick wins should be found in lighting, heating, cooling, moving and pressurising – all of which are common processes.
One in three machines globally feature a Siemens control system, so we’re aware of the role we need to play in highlighting the art of the possible when it comes to net zero and sustainability.
The skills challenge is another ongoing problem for manufacturers and as digital skills become more prominent, the sector will likely face increased competition for talent from other areas. What does the future hold?
I suspect most manufacturers would say that they would like to see a greater long-term approach to skills; one that would help create the right vocational pathways for technicians and engineers to enter the sector.
Manufacturing or operational technology (OT) is converging with IT and even being influenced now by the gaming industry (e.g. the Siemens/Nvidia partnership). As we make more use of digital twins and generate high-definition, physics-based models of products and processes, manufacturing is increasingly going to be drawing on information technology and gaming skills, and that’s exciting.
We’re trying to play our role in that through our Connected Curriculum programme, working with ten UK universities to make sure the industrial digital thread is integrated into the curriculum of a range of courses.
This will enable students to get exposure to the tools that really enable new levels of productivity and carbon reduction – the ability to design, simulate and verify a product with dramatically reduced prototyping costs, which of course has an impact on the environment. Around 80% of the ultimate carbon footprint of a product can be influenced at design stage, so that’s incredibly important when we think about how to design products that are better for the planet.
We are learning together about the benefits of data to enhance industrial performance and this is increasingly augmented by AI. But progress towards better products and processes derived from data use and digital tools is predicated upon the right skills base.
This is where I would support a national capability review, with numerous government and industry stakeholders involved, to make sure we’ve got the mechanical, electrical and software engineering skills needed to build the manufacturing sector of the future; one which can deploy emerging technologies at scale such as the industrial metaverse, and be better at it than our immediate competitors.
We simply don’t have indigenous industrial technology firms in the UK; there are US, European and Japanese players that dominate and we have to look at our ability to deploy industrial tech better – building on IT strengths, our role as an integrator of advanced digital technology could be our true strength in manufacturing.
Can you offer some examples of where Siemens has helped manufacturing companies (particularly SMEs) with digital technology deployment?
We are genuinely working with firms across the industrial spectrum every-day, from start-ups to mature enterprises at global scale. I hope we are seen to be a manufacturer that’s walking the talk, having faced the same challenges, namely, how, when and where to invest in people, partnerships and technology and regularly host factory visits for companies large and small to share our own improvement journey.
We’re also playing our role in a number of carefully chosen support initiatives such as Make UK – who champion change in the sector – and Made Smarter, which I have had the pleasure of co-chairing with Minister Ghani.
I am proud of a recent collaboration with JJA Pack, a small firm and Food & Drink Federation (FDF) award winner who opened a chocolate factory for education purposes called JJA Snack. The facility will be open to schoolchildren to find out about ingredients and how chocolate is made, including insights to automated and data driven technology. So, I hope we’re playing our part in inspiring young people into the sector too.
Many firms aren’t sure about their next digitalisation step, so we’ve also invested again in a large-scale conference and exhibition called Transform 2024, to bring the sector together to explore challenges and technology use cases. It’s taking place at Manchester Central on 17-18 July. We’re predicting an attendance of around 6,000 and have invested in showcasing technology in an accessible way with many of our people and partners on-hand to offer the friendliest of insights to the art of the possible.
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