It’s claimed that the wider adoption of digital technologies could cure Britain’s chronically poor productivity and create genuine social change.
The Manufacturer’s Editorial Director, Nick Peters spoke exclusively with Juergen Maier, chair of the independent, industry-led Made Smarter (previously Industrial Digitalisation) Review.
When Siemens UK CEO, Juergen Maier uses phrases like ‘burning platform’ or ‘perfect storm’, it is at first difficult to gauge the seriousness with which he uses such apocalyptic language.
It doesn’t sit well with someone whose default attitude is so positive, charming and upbeat. But it is important we do listen, and consider the real message behind the bonhomie. That at least was what I felt as I left Faraday House, Siemens UK’s HQ in Frimley, Surrey, after spending an hour in his company.
The message to government, and to that very large swathe of UK manufacturing that thinks it can carry on regardless as the rest of the world embraces digitalisation, is loud and clear: adapt or die!
Core question – it’s at the very heart of everything you’re doing, why is productivity in the UK so weak?
Juergen Maier: There isn’t one simple answer to that. I’ll maybe give you two – leadership and ambition in terms of having the confidence to reindustrialise, invest in manufacturing, invest in technology. There can be all sorts of reasons why we don’t do that well enough, but ultimately I always say ambition, and leadership. That, I think, is a really key reason.
Is that leadership and ambition on the part of manufacturers, government, or both?
It is, quite frankly, as a nation. It’s about the whole ‘mojo’ of the nation. For 30 years, we haven’t really had any major profile of manufacturing, of us being a glorious industry – which we are, but that’s not how we’re portrayed to the public. We’re an industrial nation, and we need to get quite a bit of that pride and mojo back. And I think as we do that, we’ll invest more and productivity will rise.
This article first appeared in the November issue of The Manufacturer magazine. To subscribe, please click here.
You can watch a video of Juergen Maier’s interview here.
Can it be top-down though? The leadership vacuum that you’ve just described also exists at the lower ends of the manufacturing sector, where smaller companies haven’t invested in new digital technologies. In many cases, they haven’t even invested in robotics and automation, which have been around for quite some time now. So, we’re lagging behind. This is a massive national campaign you’re talking about.
Yes, and that brings me to the second key priority, which is about the speed at which we adopt new technologies.
As well as lacking leadership and ambition, we don’t have a well-organised ecosystem with which companies, especially small-to-medium-size ones, can engage to de-risk, to give them advice, to give them support on how they can adopt robotics or additive manufacturing, or any of these new technologies.
There needs to be a well-organised support mechanism for SMEs, and we haven’t created that.
You’ve been presenting to government your views on how we can create this new revolution. How’s that going?
It’s going very well. The [Made Smarter Review] focuses on cross-sectoral activity, digital technologies and really creating a stronger Fourth Industrial Revolution. I see this less about telling government it needs to do all this stuff, but rather it needs to be a partnership – of academia, of industry, and of government getting behind a more strategic, long-term focus.
Including more leadership, more mojo, more messaging, better ecosystems, and some incentives for companies to invest in technology. But it does need to be done as a partnership; and that’s where we are, and the conversations are good.
But we already have a lot of that. We’ve got R&D tax credits, the Apprenticeship Levy, the Catapult network. Why is that not working to the level that you want from a future partnership?
Well, the good news is that we do have a lot of the individual ingredients to allow us to make this happen: the advanced manufacturing catapults, and the various forms of tax credit as you mention.
The issue is that it is not well coordinated, and not part of a long-term strategic plan. And we don’t have a campaign behind it to get everybody from industry, academia, and policy makers in government all working together to really make a huge success of this. It’s a bit ‘bits and pieces’; all good parts, but they need bringing together into a much more major initiative.
You are asking the government to invest more money. How much more?
At the moment we are in negotiation, and in the end, the government will have the difficult job of looking at all the requests that are coming from these sector deals and deciding which are the right priorities to ultimately create the highest value for the British economy.
I believe that creating a stronger industry, being a stronger part of the industrial revolution will create massive benefit to the British economy. So, we therefore need to invest more in it.
As we’re negotiating, there are no final figures available yet; but we should be investing hundreds of millions more in R&D support mechanisms – it’s that order of magnitude.
You’re asking government to help you promote technologies that will ultimately mean the loss of tens of thousands of jobs in the future. Politically, isn’t that a tall order for government?
Well, we have looked very carefully within [the Made Smarter Review] at what the challenge is with regards to displacing jobs. Be absolutely clear, this technology will displace jobs; but we’ve also looked at how many jobs will be created through both the innovation and the faster adoption of these technologies. And we are very confident that the research we’ve done will tell us that by adopting these technologies and by innovating, we will create more jobs than we displace.
Now, the trick is, how do you upskill people to be able to move from those jobs that are being displaced into the ones which are being created? The good news is, if we do that in a planned and in an organised way, the new jobs are, generally speaking, higher paid, higher value, higher skilled.
As long as we upskill as we transition towards this new revolution, the outcome is better jobs, a better economy, higher taxes. It’s good for the whole economy.
In your interim report, you said there is a massive risk involved in standing still and not doing anything. What is that risk?
Well, the absolute worst thing we can do – and the one thing that will definitely displace jobs – is if we don’t drive this industrial revolution. Quite simply, what happens if you don’t adopt the technologies at the pace that other economies are doing, is that they will be more competitive than us, so their manufacturing industries will be more successful. They’ll export more, we’ll lose out and unfortunately, lose jobs.
So, this is a no-choice – we have to invest in this technology. If we’re going to do it, we might as well do it right and make sure we make the biggest success possible, create the most jobs and create massively competitive industries.
You talked of a campaign. It feels like it’s almost throughout society that the manufacturers’ message must be heard – in schools; in families, where there is a very old perception of what manufacturing’s all about; in universities, and even in the Education Department which streams people into academic and not into technical subjects. This is a huge challenge, a huge campaign.
Absolutely. I talked about Britain getting its mojo back. I compare it to the second industrial revolution – there was no question Britain was at the leadership of that revolution. And what was driving it was new innovations. Steam, power, it was about mechanising manufacturing. It was new technologies.
Let’s ignore the third one because we didn’t do a brilliant job of that. But in the fourth one, it’s going to be digital technologies, which are the modern equivalent of steam and power and mechanisation. And if we get that right, we become leaders, we get our mojo back, and the whole nation gets behind it. We create future industries, future well-skilled people to work in them. And that’s exactly what we need to do.
You talked about power. Energy in this country costs significantly more than it does in competitor economies. Is that another factor?
Energy costs are of course a factor in the overall competitiveness situation. Now actually, energy doesn’t cost any more money in this country than it does in any others. It’s just how you choose to distribute it and whether you choose to give certain incentives to certain sectors.
This is part of the overall industrial strategy. Do we want to give certain incentives to, for example, highly intensive manufacturing industries to give them an opportunity to be able to compete better globally?
How concerned are you that the government’s travails over Brexit are going to get in the way of this industrial strategy?
Well, Brexit does concern me. There’s no question about that. It’s not going to make business any easier. It’s going to be harder. We are going to have some friction in our trading systems. It is going to be more difficult to bring some skills on board that we may need from European nations. But I’m a businessman, and I need to focus on taking my business forward here.
I actually think that new digital technologies and the new industrial revolution will act as an antidote to some of the negative things that we will see around Brexit.
Are you confident that this industrial strategy is going to end up different from the industrial strategies that have been tried and frankly not done terribly well over the past 30 years? We’re talking about a game changer that’s absolutely vital to the future of our economy.
We have an economy that is not delivering what the country needs. We don’t have enough well-paid jobs. We have a terrible balance of payments. We’re not exporting more or enough. But I’m also seeing a government that is listening and is realising that what we’ve done in the past isn’t changing that fast enough.
And I think those two ingredients coming together are creating the right burning platform to be able to say, ‘We do need to do something fundamentally different’. Therefore, I believe this industrial strategy does have a chance. Let’s put it like this: it’s now or never.
Manufacturing has not been given much credit in the past 30 years, while financial services have perhaps been given more than they deserve. We are talking about people beginning to understand the real value of manufacturing, giving it its proper place and ending this fallacy that, ‘We don’t make things anymore.’
We have finally realised that an economy that just lives on financial services…by the way, absolutely nothing wrong with financial services, it’s a great industry, it brings a lot of value…doesn’t create the well-paid jobs, the exports that we need to the level that we need them.
And there is this realisation that what we’ve dabbled with in the past hasn’t delivered what we want. So, for manufacturers and industrialists, it’s the perfect storm, the push to get out there and say: ‘We are the people who can make a huge difference towards creating a stronger industry, more well-paying jobs, and more exports that will help fix our economy’.