Manufacturing matters: Juergen Maier CBE looks at the future of the sector

There is no doubting that UK manufacturing has gone through a tumultuous few years. Having emerged from the COVID-19 crisis, where firms were forced to pivot and adapt to those unique circumstances, the sector then faced further disruption brought about by the conflict in Ukraine and a surge in energy prices, not to mention the ongoing uncertainty over the long-term impact of Brexit.

And all of this against the backdrop of unprecedented change in the sector where firms are grappling with the question of Industry 4.0 and how, when and where to deploy emerging technology. Plus, the pressing need for increased sustainability and the drive to net zero while also closing the worrying skills gap and ensuring we have the personnel to enable the sector to flourish in the years ahead. Juergen gave his take on the future of manufacturing.

Can you give us a flavour of your keynote at M&E Week?

JM: Visiting Manufacturing & Engineering Week I wanted to be upbeat about the sector and I’m pleased to say there was a real buzz at the show. The last few years felt a little more subdued as people were still partly embroiled in the challenges of recent years.

In her opening address, it was pleasing to hear Minister of State at the Department for Business and Trade, Nusrat Ghani MP, use the words “manufacturing matters”. It’s something we don’t hear enough and the policies we get as a sector are not always joined up enough to really support us through what have been very trying times.

However, I feel we’re coming to the end of this permacrisis moment and now is the time where we can celebrate what manufacturing has achieved. Just look at what’s been thrown at us as a sector with Brexit, COVID, energy prices, the biggest ever technology revolution etc. It really is quite remarkable. If there’s any sector that has passed the resilience test, it’s manufacturing, and we now have real grit to be able to take on future challenges.

In the last few years UK manufacturers have become masters of combatting crises. Of course, that’s not an ideal scenario and we need to get out of that firefighting mode and become better at longer-term thinking, but there’s no denying that we’ve become good at it.

If you compare the UK to other countries such as the US and Germany, they get more support around rising energy costs and new technology adoption etc. That means we’ve had to be super innovative to continue to thrive in a globally competitive world.

I’ve seen so many manufacturing companies that have completely changed and adapted and are now doing more than just survive. We should see this as a moment where we really emerge from those crises of the last few years and into some calmer waters. Combine that with all our new-found grit and energy, and we will be able to deliver not only much more positive growth and ambition for our businesses, but for our economy and ultimately, society.

How are manufacturers addressing the net zero challenge?

The truth is that a decade ago, net zero wasn’t the top board level agenda item that it is now. When I was at Siemens we were bringing to market technology that was helping to reduce carbon footprints and lower energy costs, but customers weren’t all that interested.

I was often criticised for saying that energy was too cheap, which meant that it wasn’t a top priority for manufacturing CFOs. That’s changed massively and a key factor behind its rise to prominence has of course been the sharp rise in energy costs. 2030 is staring us in the face so it’s vital for our survival that we reduce our energy costs.

2023 seemed a long way off when we started talking about the targets of net zero. However, it is literally around the corner in terms of investment cycles within manufacturing. So, there can’t be anything more important. And I am seeing lots more going on because as a country, as a world and as business people, we’ve all become more responsible, but we have to keep accelerating.

It would be bold to say we’re on track to do that and as we get closer to 2030 we’ll definitely see pressure ramping up. Everyone has their part to play from supply chains to government, who need to help by providing the right policies. But we as manufacturers have really got to use the next few years to make progress; there’s lots of technology out there that we can implement and this is the time to do so – there’s no room for complacency, we’ve just got to make it happen.

For example, I recently attended the opening of a new innovation institute called Glass Futures in St. Helens, the birthplace of glass manufacturing, a hugely energy intensive process. It was fabulous to see the real opportunity for glass manufacturing to transition from using natural gas to either biofuel or synthetic fuels, and probably hydrogen.

The UK may well be the first location in the world that actually has a hydrogen producing glass plant. That really excites me because this will not only have a great impact on net zero but will also put the UK in a place where we can invent or IP something groundbreaking and export it around the world.

Another example, and one close to my heart as I’m on the board, is a company called Riversimple, a UK start-up making hydrogen vehicles. We’ve got five fuel cell hydrogen vehicles currently running as beta projects. I believe, alongside battery vehicles, that there is a future for hydrogen, especially for longer range vehicles.

This company also excites me from the point of view of the circular economy. Riversimple is designing a business model based around the concept of selling less cars, which is completely different to what the automotive industry does today. Every new car, whatever model, has a significant amount of carbon associate with it. At Riversimple, customers buy a simple car and after three years they give it back and get a new one. Riversimple totally refurbishes the old car, makes it as new and puts it back out into the marketplace – the longer the cars last, the more efficient they are.

What appetite are you seeing for digital technology adoption?

Just looking around the exhibition, the amount of businesses talking about digital technology is absolutely huge compared to just two or three years ago. Every manufacturer now knows the role digital will play in the sector’s future, in the same way the importance of net zero has risen to prominence; and the two go hand-in-hand of course, because digital technologies also help achieve net zero targets.

Manufacturers have to take the mechanisms that are available today, embrace them and get in the race of adopting digital technologies. Again, going back to my days at Siemens, there wasn’t that imperative to accelerate. However, COVID transformed our way of thinking in terms of simulation, digital twins and optimising product manufacturing, service life cycles, etc.

Digital twins was just a buzzword a few years ago but I expect them to really take hold of the sector, and surveys say that they will grow by tenfold over the next decade. This sort of technology may sound expensive, especially for SME manufacturers, but as Chair of the Digital Catapult, we are hoping to launch a programme to help make digital twinning more accessible for small to medium size engineering manufacturers.

They will be able to come and experiment with the technology, create living laboratories and explore how emerging technology can add value to their manufacturing processes. AI is another piece of the technology jigsaw that has been spoken about for quite some time. Then, suddenly along comes ChatGPT and the whole world wakes up to artificial intelligence as something that could be really transformational.

I’m unquestionably on the side of opportunity when it comes to AI. I don’t agree with people who say the technology is going to take away our jobs. We’ve been here before, several times. I remember when Siemens brought in the first PLCs, industrial PCs and robot systems to market; we had exactly the same conversations.

Of course, AI is different and its cognitive power is at a completely different level so we have to be responsible, regulation has to be right and we have to create a level playing field. However, the opportunity is massive. It is very much a tool that we can use to help analyse data and improve manufacturing processes and we should embrace it.

What’s your view of the current manufacturing skills shortage?

You could look at the skills issue through the lens of what government is doing and whether it’s enough. However, as a sector we really have to rethink this issue for our own organisations.

The half-life of skills is now so short. When I did my engineering degree, I was still living off that knowledge some ten years later. Now, because technology is changing so rapidly, that knowledge has a life of around six months, so people are constantly having to retrain and upgrade.

In such an environment, we can’t rely on the more traditional training processes of sending people on courses etc. It needs to be something that is built into the workplace. As we invest in technology, we need to be thinking about our people in the same way. Traditionally, people have been viewed at best as an intangible asset and at worst even a liability on balance sheets.

I’ve always struggled with that concept, and we need to change the mindset so that our people are viewed as an important asset which we’re going to continuously invest in. And when a recession hits, the first budget we cut shouldn’t be skills and training; in fact that’s where we should be investing. Skills must become a proper line on the investment balance sheet of our organisations.

There is a pressing need to continuously invest in and upskill our people so that we can stay ahead of these digital transformations. None of what I have previously discussed around net zero and technology is going to be possible without taking skills to the next level.

Does the UK have an industrial strategy?

For the last decade many of the industrial leaders in the UK, including me, have been fighting for a proper industrial strategy. I’ve advised every government, sat on every industrial strategy council, and now I’ve been asked to help with the latest review on the lack of inward investment. What I’ve learned from it all is we’ve just got to learn to rely less on government.

That doesn’t mean that we can do it all without help. But I think we need to turn the tables and be the leaders ourselves. On the skills issue, for example, different incentives could be introduced to encourage investment in our people – skills investment tax credits for example.

We need to be leading on these sorts of policy changes to government, rather than merely waiting for them. We currently only have bits and pieces of an industrial strategy in place. And as a country, we have not responded to global changes in terms of helping our key industries like automotive, glass and steel to really move into the space of the Fourth Industrial Revolution.

However, I have hope that this failure shows to policymakers that we need change and that whatever happens after the next general election, there will be another opportunity to talk about a more serious industrial strategy, with more collaboration on strategies to bring together some of the themes and technologies discussed here. That word ‘collaboration’ is key.

The UK is doing some wonderful work in robotics, 3D printing and digital twinning, for example, but it’s often in isolated islands and pockets. Because of that, those initiatives don’t scale to their full potential; not everyone knows about it, and not everyone engages with it. That ultimately means we’re less visible on the world stage; what is needed is more collaboration, more scale and more impact.