Financial R&D support top priority for UK manufacturing

Posted on 24 Feb 2017 by Jonny Williamson

Help from government to invest in new technologies and a better educated workforce top the wish list for UK manufacturing executives, according to a new report from KPMG.

Almost three-quarters (70%) of UK manufacturing businesses surveyed by KPMG said financial support from the government is needed to help them increase investment in emerging technologies, including artificial intelligence (AI), advanced robotics and augmented reality (AR).

Access to a better educated workforce came a close second, with 65% of respondents stating that an improvement in the availability of skilled talent could help them increase productivity in their organisations.

UK head of industrial manufacturing at KPMG, Stephen Cooper explained: “The majority of UK manufacturing executives named financial support for R&D as a top priority from the government to help them boost their competitiveness and prepare for the digitalisation of manufacturing.

“Clearly there’s an appetite to embrace emerging technologies, as highlighted in the recent Industrial Strategy green paper. The UK has an opportunity to position itself as a globally attractive and competitive base for advanced manufacturing.

“At the same time, with the gap between supply and demand of STEM talent in manufacturing set to widen, government, industry and educators will need to act quickly to ensure UK manufacturing sector is equipped with the right skills for digitalisation.

“Digital scientists, digital engineers, digital architects, cyber security engineers – none of these existed 20 years ago. Having access to the right skills and investment will be crucial to ensure Britain’s manufacturing sector unlocks its full potential and remains fit to compete on the international stage.”

In light of the Brexit vote, the report also revealed that, encouragingly, approaching half (43%) of outward investors are undeterred by the uncertainty the vote has created, and don’t believe that it will make it harder to recruit. Around a third of respondents are considering relocating some of their operations out of the UK over the coming three years, while 67% have no plans to move.

Head of Brexit at KPMG, Karen Briggs commented: When our survey was carried out in January, two-thirds of respondents expected uncertainty around Brexit. However, Britain’s makers are an especially resolute group.

“Although some are concerned about exchange rates, labour pressures and higher indirect taxation, they are also taking a range of practical measures to prepare. These include partial relocation, supply chain management, increased business development, and new sources of financing.

“UK manufacturers realise that Brexit will demand a burst of innovation from both the private and public sectors if the UK is really going to reach new global markets and deliver on its potential.”

If faced with rising costs, the majority of respondents (65%) plan to make up for these by either saving costs elsewhere, or by absorbing them, while 35% expect to pass these on to the customer.

Cooper concluded: “A focus on openness to foreign investment, access to talent, engagement with new markets, a positive regulatory and legal environment, as well as a coherent Industrial Strategy will drive the UK to new levels of competitiveness and ensure manufacturers are ready to capitalise on Industry 4.0. It’s time for a rethink.”

KPMG’s Designing a UK industrial strategy for the age of Industry 4.0 report can be downloaded here.