What’s holding UK manufacturing back from achieving its potential?

Posted on 25 Apr 2017 by The Manufacturer

UK manufacturing is, on average, less productive and grows less quickly than its equivalents in other major economies. Yet the UK is a great place for innovation in technology and has highly skilled workers.

Steven Barr analyses what’s holding our manufacturers back from achieving their potential, and calls for the government to back cross-industry collaboration as a key enabler of productivity and growth.

Steven Barr chairing The Manufacturer’s Annual Leaders Conference 2016 in Birmingham.
Steven Barr chairing The Manufacturer’s Annual Leaders Conference 2016 in Birmingham.

UK manufacturing has enjoyed an unplanned boom in exports due to a weak pound. Now the rising cost of imports threatens to overwhelm this price advantage. For many years, we have needed sustainable strategies for a strong and competitive manufacturing industry, both in UK markets and overseas.

The UK government has consulted manufacturers and other interested parties about the shape of a modern industrial strategy, intended to “improve living standards and economic growth by increasing productivity and driving growth across the whole country”.

UK manufacturing is significantly more productive than most other UK sectors such as financial services, but we lag the other G7 nations. The recent export bonanza boosted output only temporarily, and the trend of many years of low growth continues.

There is room for improvement; but how can industry overcome the relative inertia that seems to hold our manufacturers back from achieving their potential?

Growth = innovation + market pull + business change

New ways are fundamental to improved productivity and growth. Automation, additive manufacturing and customer inter-networking (Internet of Things) technologies can boost output and cut the cost of production. Leaner processes reduce waste.

More skilled and motivated people do a better job and drive improvements from the inside. But none of these innovations makes a difference unless driven by customer preference and the business changes to embed the improvement.

For example, Optos, the Dunfermline-based maker of retinal imaging equipment, has designed its products to deliver a ‘pay per view’ service to internet-connected customers rather than asking them to pay outright for one of these highly sophisticated devices.

The need for business change is the most challenging of all, especially to SME-sized manufacturers. Investment brings risk – to financial stability and to business ownership. New technologies will be disruptive to existing operations and to the people who run them. Delivering services from products, as in the Optos example, requires a fundamental shift of business model and behaviour.

Collaborating for change

The size of the business change challenge comes through in many ways in the Annual Manufacturing Report 2017 (AMR). Take the AMR graphics reproduced below of attitudes to smart factory connectivity. More than 80% of manufacturers say they want to use digital technologies to improve knowledge and control of processes, and they expect significant benefits in terms of output and costs – but, over two-thirds of manufacturers are concerned about development costs, lack of expertise, cyber security and ROI.

AMR Infographics - April 2017

Breakthrough depends on finding the right expertise at the right price at the right time and in the right place. No one solution provider can help a manufacturer to solve all the issues. In reality, we need to hear from other manufacturers who have improved productivity and grown. Engagement with potential buyers and users of products and services is essential.

Technology upgrades should be progressive, operationally and in terms of cashflow. Finance needs to be matched to the technology and the business, and ownership is a key consideration. And all of this must be wrapped up in a coherent business strategy setting out how the parts will work together for maximum impact.

In short, manufacturers need an ecosystem of support to define and to achieve their growth ambition. The Fraunhofer network has been building the German manufacturing economy for 68 years, aligning university research and training with the needs of large makers who nurture innovative smaller businesses, all underpinned by government support.

A modern Industrial Strategy for the UK should create the conditions for collaborations between expert UK manufacturers, suppliers, buyers and users, technologists, equipment makers, IT systems providers and analysts, financiers and (even) consultants and advisers.

The Manufacturer Collaboratory

The Manufacturer Collaboratory is our contribution to accelerating innovation, productivity and competitiveness in UK manufacturing. This free service for UK manufacturers is powered by ProFinda, the market-leading talent-matching platform.

Online, manufacturers can quickly find answers to their most challenging issues. And through secure peer-to-peer and business-to-business dialogue, without pressure from solution providers, manufacturers can discover new business opportunities.

Our expert manufacturing advisors work closely with manufacturers to create supportive ecosystems, refine solutions, strengthen the business case, engineer real-world improvements and deliver business successes. Only where appropriate do we refer manufacturers to shortlists of expert solution providers suitable for their needs.

If you are a decision maker in a UK manufacturer or a solution provider passionate about UK manufacturing then we’d love to hear from you – you can apply to join The Manufacturer Collaboratory at hennikedge.profinda.com.