Manufacturing a resilient recovery

As the UK emerges from the worst public health crisis in a century, the manufacturing sector must put resilience at the heart of its recovery. Rob Allen, from Policy Connect, outlines the Manufacturing Commission’s forthcoming report focusing on how the sector can become more resilient, productive and sustainable post-pandemic.


The Manufacturing Commission’s report explores how the sector can become more resilient, productive and sustainable as it builds back from the pandemic.

COVID-19 has disrupted almost every aspect of the manufacturing sector, from procurement and staffing to supply chains and fulfilment. UK businesses were impacted three times over as lockdown restrictions reduced on-site productivity, overseas supply chains broke down and countries all over the world entered recession, leading to plummeting demand.

This was brought to light at the beginning of the pandemic as it emerged that production of Personal Protective Equipment (PPE) had been outsourced overseas and ‘just-in-time’ practices meant that the UK had stockpiled just seven days’ worth of aprons and less than a day’s worth of gowns.

These challenges proved too great for some businesses and many companies forced into bankruptcy were old enough to remember the last pandemic of this scale back in 1918.

However, other manufacturers have prospered, repurposing their production lines to meet the national demand for PPE, embracing new technology to mitigate the impacts of the virus and levering their existing contacts to benefit from collaboration. So why, faced with the same challenge of COVID-19, have different businesses fared so differently?


CEO of Policy Connect and former Labour MP Jonathan Shaw, speaking at an Industrial Strategy event

The inquiry

The Manufacturing Commission, chaired by Lord Bilimoria of Chelsea and with support from Enginuity, the ERA Foundation and the High Value Manufacturing Catapult, has sought to answer this question as part of its current inquiry into sustainable manufacturing. Since the beginning of the year, the commission has gathered evidence from over 50 contributors, including businesses, academics and parliamentarians. It became clear very early in this process that resilience was not only essential to weathering the impacts of the pandemic, but also to the wider sustainability agenda.

Lord Karan Bilimoria speaking at a Policy Connect Level Up Industry event as Chair of the Manufacturing Commission – Image courtesy of Larry J Photography

Benefits of resilience

No one can predict the future, and many of the world’s leading epidemiologists did not foresee the impact that COVID-19 would have at the outset of the pandemic. Companies that appear to have fared best also did not have any unique insight, rather they had focused on the creation of intrinsic value that allowed them to become more productive and resilient to a wide range of external shocks.

A common attribute of these successful businesses was that they prioritised nonlabour efficiency – i.e. increasing the value derived from every tonne of material, litre of water and kilowatt of energy that goes into the production process. When the pandemic led to volatility in global commodity prices and the break-down of overseas supply.

It became clear early in this process that resilience was not only essential to weathering the impacts of the pandemic, but also to the wider sustainability agenda chains, companies that were most energy and resource efficient were insulated against this price fluctuation and those that sourced materials locally were able to continue doing business.

Links to climate crisis

Building this kind of resilience will also help to mitigate the impacts of a far larger challenge – the climate crisis. On energy efficiency, contributors to the inquiry have highlighted measures that are ‘no regret’ and have low payback times. For example, using variable speed drives to slow a fan or motor from 100% to 80% capacity can cut energy consumption by half. Embracing resource efficiency can also provide businesses with opportunities to reduce carbon emissions and improve resilience, especially as production of raw materials accounts for around 19% of carbon emissions globally.

Recommendations

Of course, government has a role to play in helping the manufacturing sector to both recover from the pandemic and achieve net zero greenhouse gas emissions by 2050, all while continuing to produce the things that society wants and needs.  We welcome the measures set out within the Treasury’s plan to Build Back Better and the Department for Business Energy and Industrial Strategy’s Industrial Decarbonisation Strategy. In particular, proposals to develop low carbon product standards and consumer labelling will reduce offshoring carbon emissions and ensure that businesses that have invested to improve resilience and embrace sustainability will face a level playing field.


Lord Karan Bilimoria speaking at Digital Manufacturing Week 2020


 

However, we have also made recommendations where policy makers can do more, such as in providing access to finance, particularly for SMEs. Given the manufacturing sector’s invaluable response to the COVID-19 crisis, including production of PPE, the VentilatorChallengeUK and development of the University of Oxford’s AstraZeneca vaccine itself, it is unfortunate that the sector has been amongst the hardest hit.  However, with the right help from government, businesses can build resilience to future disruption, whether that be the implications of leaving the EU, financial shocks, the climate crisis or even unforeseen, ‘black swan’ events.

The Manufacturing Commission forms the research arm to the All-Party Parliamentary Manufacturing Group.

Rob Allen is a Policy Manager for Industry, Technology and Innovation at Policy Connect and author of the forthcoming Manufacturing Commission report.