Future - Where next for UK manufacturing

FUTUREWHERE NEXT FOR UK MANUFACTURING?

Professor Lord Bhattacharyya Chairman, Warwick Manufacturing Group, University of Warwick

Adrian Walker Managing Director and Head of Global Transaction Banking, Lloyds Bank

Sue Graham JohnstonManaging Director, BOC, A Member of The Linde Group

Archie MacPherson CEO, Warwick Manufacturing Group centre, High Value Manufacturing Catapult, University of Warwick

Andrew CarrCOO, Digital Catapult

Martin Donnelly Permanent Secretary for Business, Innovation and Skills

Carolyn Fairbairn Director-General, CBI

James SelkaCEO, Manufacturing Technology Association

CONTRIBUTORS

from across the advanced manufacturing sector came together

at the CBI manufacturing event at the University of Warwick on 5 May.

200 DELEGATES

It was an insightful and inspirational event with industry leading keynote speakers and contributors

highlighting the strengths and weaknesses of one of our most important industries.

The theme of the event was‘THE FUTURE OF UK MANUFACTURING’.

Here are some of the key comments from the day…

INNOVATION

IN THE GLOBAL INNOVATIONINDEX IN 2015

2NDTHE UK IS

Source: globalinnovationindex.org/content/page/data-analysis/

Innovation itself is misunderstood. Innovation is not about taking a particular product and

improving it. It’s actually breaking your knowledge of what you have got now, to go to the next step.

If you don’t do it, somebody else will do it.

Professor Lord Bhattacharyya, Chairman, Warwick Manufacturing Group, University of Warwick

80 percent of companies that I visit don’t have innovation on that boardroom agenda. Why are they

stuck in their day-to-day fire-fighting of operations, getting product out the door, doing their day job, as

opposed to investment and development?

Archie MacPherson, CEO, Warwick Manufacturing Group centre, High Value Manufacturing Catapult, University of Warwick

One of the things more evident in the US than in Britain is open innovation or transparency,

companies running events, contests, leveraging open R&D to accelerate new developments or even

highlight where they want innovation.

Sue Graham Johnston, Managing Director, BOC, A Member of The Linde Group

There is a phenomenal ecosystem in the UK of start-ups and innovation. For larger organisations,

there needs to be acceptance that we don’t have to do everything from within. Partnering

collaboration is absolutely critical and fundamental.

Andrew Carr, COO, Digital Catapult

DIGITAL TECHNOLOGY

OF POLL RESPONDENTS EXPECT IMPROVED CUSTOMER EXPERIENCE AND SATISFACTION

AFTER INVESTING IN TECHNOLOGY

47%

What do we know about the UK’s take-up of digital technology? Well, the first thing is we are one of the

leaders in the availability of digital technology. We’re actually 4th in the world, according to WEF numbers. We are only 14th in the world in terms of take-up, so

here is the challenge. How do we change that?

Carolyn Fairbairn, Director-General, CBI

The theme I picked up this morning is we’re not good at deploying existing technology. We have to get better at that and you can use universities and research centres to help you de-risk that process.

Archie MacPherson, CEO, Warwick Manufacturing Group centre, High Value Manufacturing Catapult,

University of Warwick

I believe that while technology poses a challenge for all of us it also has the potential to help renew

and revitalise business and as long as we embrace it in the right way, we have huge opportunities.

Adrian Walker, Managing Director and Head of Global Transaction Banking, Lloyds Bank

SKILLS

PEOPLE IN THE UK

2.6mMANUFACTURING EMPLOYS

Source: eef.org.uk/campaigning/campaigns-and-issues/manufacturing-facts-and-figures

We must enthuse and inspire the next generation of young people to want to go into the manufacturing

sector, to understand it, to engage with it, to see how exciting, fun, fulfilling, and enjoyable it could be.


We are very concerned to ensure that the digital skills business needs over the coming five years arrive

through our training programmes. We’re taking action across the digital skills pipeline from reforming the

schools’ computer science curriculum to establishing a national institute for coding… to ensuring higher apprenticeships, and degree apprenticeships are developing the necessary higher-level tech skills.

Martin Donnelly, Permanent Secretary for Business, Innovation and Skills

36%OF POLL RESPONDENTS STATE LACK OF

SKILLS INTERNALLY ARE PREVENTING THEM FROM INVESTING IN DIGITAL TECHNOLOGIES

Analytics is a big gap for most companies. When I talked to the leaders of the MTCs

the right investments are being made to grow a group of apprentices.

It’s just that we can’t grow them fast enough to service the needs of industry.

Sue Graham Johnston, Managing Director, BOC, A Member of The Linde Group

SHORT-TERMISM

LARGEST MANUFACTURING NATION IN THE WORLD

11thTHE UK IS THE


OF UK EXPORTS ARE IN MANUFACTURING

44%Source: eef.org.uk/campaigning/campaigns-and-issues/manufacturing-facts-and-figures

Short-termism kills innovation. The focus on profitability over the short-term has given us

a legacy of industrial neglect, which stifles innovation and has meant we’re unable to

compete. It’s very important that we take a longer-term view of profitability to fully understand ROI.

James Selka, CEO, Manufacturing Technologies Association

Why is it that so many British companies are now owned by foreign companies? It’s all because they are quite prepared to invest

in the medium to long-term. They are quite prepared to invest and say to themselves you can’t make money out of investment in a year.

Professor Lord Bhattacharyya, Chairman, Warwick Manufacturing Group, University of Warwick

33%OF BUSINESSES POLLED DON’T HAVE A DIGITAL/TECHNOLOGY STRATEGY

One of the first questions UK manufacturers ask when you’re selling them new technology,

is ‘How much?’ In Germany, the US or other places, they want to know ‘What can this

technology do for my business over the next five years?’ It’s a cultural barrier that’s preventing re-industrialisation and we need to overcome it.

James Selka, CEO, Manufacturing Technologies Association

THE FOURTH INDUSTRIAL

REVOLUTION

OF GVA

IN THE 1970S MANUFACTURING ACCOUNTED FOR 25%


OF GVA

IN 2015 IT ACCOUNTS FOR

10%Source: eef.org.uk/campaigning/campaigns-and-issues/manufacturing-facts-and-figures

This is an important moment too because whether we call it the Fourth Industrial Revolution or Industry

4.5, or manufacturing 4.0, smart manufacturing, or intelligent digital manufacturing. It is clear that there is a global shift taking place rapidly that has

profound implications for manufacturing.


These are, I think, really exciting and extraordinary times. This is truly a Fourth Industrial Revolution. I think there is absolutely no reason the UK can’t

be at the forefront of all of this. After all, we led the first two Industrial Revolutions. We were a good

runner-up in the third and we can lead the fourth.


We can use the Fourth Industrial Revolution to build new opportunities for UK business. We are building a platform for businesses

to grow, to invest, and to make profits. I think it’s a very exciting time for all of us.


CONCLUSION

All the stars are aligned in our favour. We have the right language. We have an international reputation for innovation. We have the right time zone between

Asia and the US. We have the lowest tax regime in the G7. We have the most flexible labour laws in Europe. That’s why we get the lion’s share of FDI.

James Selka, CEO of the Manufacturing Technology Association

82%OF POLL RESPONDENTS

AGREE THAT DIGITAL TECHNOLOGY CAN DRIVE ECONOMIC GROWTH

Why is it so vital that we maintain a strong manufacturing base in the UK? At the CBI we do believe it is vital to prosperity, and it’s vital to prosperity for three reasons:

1It helps us

have a more balanced economy

2It makes us more

diversified

3It makes us more

innovative

Our conclusion is that manufacturing as a strong and resilient base for our economy, matters to the wider success of the UK, to families,

communities, and to the future of our country. That’s the basis for why we must make it thrive.

Carolyn Fairbairn, Director General, CBI

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upon as offering advice for any set of circumstances. Specific advice should always be sought in each instance.

Lloyds Bank plc Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 2065. Telephone: 0207 626 1500.

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Economy & Finance

Future - Where next for UK manufacturing