October 19, 2018 Written by: Michael Thomas

The manufacturing industry is not at the dawn of a bright new digital age; it began decades ago. Globally, we’re seeing manufacturing companies investing in technology and continuing to advance automation to propel the industry forward. We’ve entered an exciting era of manufacturing that’s adopting ground-breaking artificial intelligence, advanced robotics, augmented reality, data analytics and more.

According to the 2016 Global Manufacturing Competitiveness Index, the UK was ranked 6th in the world for manufacturing competitiveness and projected to fall to 8th by 2020. A study by the GMB union found the sector has lost 600,000 jobs in a decade, and in June the industry recorded its second consecutive quarter of negative growth for the first time since the beginning of 2016. UK manufacturing productivity is now below Germany and France. As other nations are quick to embrace technology and automation, are we about to see British manufacturing be left behind?

 

Are the leaders on board?

While the UK manufacturing sector may have traditionally been slow to feel comfortable with automation entering the industry, CEOs are now seeing the huge opportunities for growth through technology. A report from KPMG tells us that not only are the sector leaders looking to a digital future, they are optimistic about the transformation; 95% of CEOs asked agreed that “technological disruption is an opportunity and not a threat.”.

 

A key challenge for CEOs in bringing these technologies into their companies is managing expectations around ROI; while two thirds said they were “personally prepared to lead [their] organisation through radical transformation”, they still felt they would be under significant pressure to demonstrate the value of their technological investment within unreasonable timescales. The risk is that transformation strategies will be abandoned if CEOs don’t build in early wins to the plans.

Is there real commitment?

UK manufacturing leaders may have the desire and ambition to harness digital technologies to take their manufacturing organisations to new growth and higher productivity, but are they actually investing or committing to the digital transformation programmes they put in place?

 

According to the Annual Manufacturing Report, less than 17% of manufacturers gave a strong commitment to adopting digital technologies, and a further 37% said that they have embraced the adoption message but have some hesitation to make the move. The rest responded with varying degrees of uncertainty around a lack of information about how these technologies should be adopted and which ones. While it’s clear the UK manufacturing industry as whole believes industrial digitalisation is the way forward, there’s still some uncertainty around how to do it. Without a sense of urgency, there is a real danger that competitor nations who are quicker to adopt change will continue to leave UK manufacturing further behind.

Is automation eliminating jobs?

It has long been considered that a rise in automation and other digital technologies may progress the industry, but have a substantial negative impact on jobs. A report from PwC into artificial intelligence suggested that AI would overall create more jobs than were lost by 2037, but it’s findings for the manufacturing sector estimated a net loss of almost 700,000 current jobs through automation.

 

The reality is, without automation, manufacturing in the UK cannot remain competitive. We’re already seeing the impact on productivity of automation being more readily adopted by the likes of Germany and France. Information from the International Federation of Robotics on the density of robot use within manufacturing highlights how far behind the UK is and, as other nations are predicted to continue to grow their use of automation, how far the industry in the UK needs to go to simply catch up. The world average is 74 installed robots per 10,000 employees. Falling below the world average, the UK has only 71 units, making it 22nd in the world. Compare this to Germany with 309 units, France with 132 units and the US with 189 units, and the extent of investment required into manufacturing within the UK is becoming apparent.

 

Despite fears for jobs loses brought about by automation, 64% of UK manufacturing CEOs still believe that AI will create more jobs than are lost by moving them into jobs that robots cannot perform, and that the key to a successful organisation lies in the most effective use of artificial and human intelligence as a whole.

 

Is the talent there?

The sector has been increasingly experiencing a skills shortage due to an aging workforce. Now, there’s an additional challenge in finding and recruiting those with the right skillset to progress their digital transformation strategy; with all industries experiencing digitalisation, there’s a lot of competition for talent. With a strong belief held among those in the sector that the education system isn’t producing young people for careers in industry, they’re finding recruitment increasingly difficult. In short, the manufacturing industry in the UK is going to have to work hard to attract and retain the right people, particularly those that will be taking on executive and leadership roles.

 

The UK manufacturing industry may have a way to go to fully get on board with the digital transformation that is taking place across the industry worldwide, but at still 9th in the world for manufacturing output, it’s certainly far from a done deal. A 2015 study by Barclays found a further £1.2 billion investment in automation could add £60.5 billion to the UK economy from manufacturing over the course of a decade. Mike Wilson, head of Bara (British Automation and Robot Association) has said the UK could boost productivity by 22% if it became as automated as its competitors.

 

That said, with the right and swift investment into technology, combined with the right people to lead the way, the future of manufacturing in the UK is poised to be very bright indeed.

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