The Work Foundation has called on Government to help manufacturers add services to their product offering in order to help the industry lead Britain back to prosperity.
The organisation, part of Lancaster University, releases a new report today which says Whitehall ‘must go beyond the traditional view that manufacturing is just about making things’ and put manu-services at the heart of its growth agenda.
The report – More than making things: A new future for manufacturing in a service – contends that manufacturers can no longer compete internationally on production alone and that services already account for 15-20 per cent of UK manufacturers’ revenues.
“The idea that the UK simply needs to get back to ‘making things’ reflects an outdated view of the manufacturing industry,” says Andrew Sissons author of the report. “From mobile phones to aeroplanes, today’s manufacturers don’t just sell products – they sell solutions, experiences and outcomes. This area now offers a major opportunity for the UK to increase its manufacturing exports and overcome its severe strategic trade gap, moving it decisively towards a rebalanced economy.”
He points to Apple as a prime example for effective use of services to support manufacturing. “iPods are assembled in China but only 5% of the value is captured there,” he says. “The bulk of Apple’s profits are achieved through its design, branding and intellectual property.”
He says UK manufacturing is “well positioned” to lead globally in manu-services because of its highly skilled workforce, a strong services sector and “excellent” academic institutions. With only 42% of manufacturing jobs in the UK are now in production – which is lower than in France and Germany – the UK has a growing level of employment in areas like research, design and marketing.
However, the report warns that action is needed, including the creation of a network of banks, universities and support organisations to the barriers to growth specifically faced by manu-service firms.
It calls for an extension of the Manufacturing Advisory Service to support this new area.
Sissons adds: “To secure the UK’s place as a world leader in manu-services, the government must place them at the heart of its policy agenda. Manu-services mark a significant gap in government policy, and the Coalition should invest resources in developing an evidence base and detailed understanding of how UK business can benefit from this business model.”
The report is available on The work Foundation’s website.
Click here for an extended editorial from Andrew Sissons on the value of manu-services on themanufacturer.com.