Five key trends for UK manufacturing industry in next decade

Posted on 19 Aug 2013 by The Manufacturer

Over the next decade the UK’s manufacturing industry is set to undergo some radical changes. To help manufacturers understand what’s in store, Steve Winder, RVP Manufacturing UK at Epicor, a global leader in business software for manufacturing, distribution, retail and services organisations, shares key findings from the company’s latest report entitled ‘UK manufacturing 10 years from now: innovative, international and in a hurry’.

Steve Winder, RVP Manufacturing UK at Epicor
Steve Winder, RVP Manufacturing UK at Epicor

UK manufacturing is going through a period of profound and irreversible change. The impact of national and global economic, technological and political trends is transforming the way we make things, along with where and how we make them. The next ten years holds a series of game-changing shifts for the UK manufacturing industry, and it’s going to have to be both adaptive and innovative to survive.

In line with other major economies, UK manufacturing has undergone a period of decline, yet continues to make a significant contribution to GDP. It remains vital for long term economic growth and sustainability. According to a 2012 study by McKinsey called ‘Manufacturing the future, the next era of global growth and innovation’manufacturing generates up to 70 per cent of exports in major manufacturing economies, and up to 90 per cent of business R&D spending.

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Epicor has recently been studying the predictions and opinions of organisations working in and with the UK manufacturing sector to analyse the top trends impacting this vital UK sector over the next decade. There is considerable consistency with firms from different manufacturing sub-sectors expressing very similar concerns and plans for a range of external influences, including a volatile global economy, growing international competition, ever stricter legislation and sustainability targets, rising energy and raw material costs, the impact of new technologies, and business pressures to reduce complexity, boost efficiency, streamline operations and drive innovation.

Here are the top 5 trends that will impact the industry over the next ten years:

1.     Globalisation requires a new approach

Widespread globalisation is being gradually replaced with targeted international production and distribution. Companies are moving closer to their customers and establishing a presence in regions with high growth potential or influence. This approach has far-reaching implications for business decision-making and management, requiring a balance between local execution and centralised control that can be difficult to achieve.

2.     Innovation and speed will be critical

Experts and leading industry figures agree that both innovation and speed to market are crucial for the successful survival of the UK manufacturing industry. According to PwC’s 2013 report ‘Preparing for Growth, manufacturers adopt new strategies for growth and competitive edge’, “survival in today’s global market and investing in the future requires organisations to innovate and be able to commercialise successful innovations quickly.”

3.     Portfolios and production lines will focus on profitable products

Increased production costs, changing customer needs and a stricter regulatory environment mean manufacturers will look at reducing product portfolios and producing smaller batch quantities, shifting focus to a limited number of high-value, high-functionality products – those that generate the greatest revenue for the business. Alternative revenue generating options are likely to include licensed products, contracting-out spare production capacity and partnerships, while some manufacturers will increase service offerings, including value-added services and integration options. Another prevalent trend will be the shortening of product lifecycles . In the race for competitive differentiation, the time from drawing board to delivery becomes shorter and increasingly important. Adopting new technology will help manufacturers bring their products to market faster than their competitors.

4.     IT and intelligence will have an inestimable impact

Improved enterprise resource planning software, the use of radio frequency identification (RFID) tags and enhanced production line automation and monitoring already boost efficiency and operations and will continue to have a significant impact on the manufacturing industry. The emergence of deep and intelligent connectivity between devices and systems will introduce a raft of operational and customer benefits and a leaner, more responsive approach to manufacturing. In addition, cloud-based technologies and software-as-a-service (SaaS) applications will underpin more collaborative, agile and mobile working practices.

5.     Sustainability will be an industry-wide standard

Energy costs are continuing to rise and there are increasing pressures to reduce environmental impact and waste. Over the course of the next decade many firms will be turning to newer, cleaner technologies to power their operations and support their services across the world. Energy management will become a key part of every manufacturer’s responsibilities.

The world is changing, and will continue to change. To survive the next ten years, the UK manufacturing sector needs to become responsive and innovative, ready to create and produce the products and services that will sustain a future generation.  The journey is already underway. From the cocoon of a long outdated oil-and-overalls image, a revitalised, clean and innovative sector is already starting to emerge. Over the next decade manufacturing could become one of the most exciting, innovative and opportunity-rich sectors for young people to forge a career in.