Late last year the UK government launched its Made Smarter pilot programme. The initiative, which follows the 2017 publication of the Made Smarter Review, aims to invest £20 million in manufacturing businesses in the North West of England. It will do this in the form of grants designed to help small and medium-sized manufacturers adopt technologies such as robotics, 3D printing, virtual reality and artificial intelligence.
The Made Smarter pilot is an attempt to reboot British manufacturing. And there is certainly a perception that it needs it: that UK factories are no longer the economy’s main drive, that they are old-fashioned and resistant to change, that newer technologies are more associated with the industry in Germany or the Far East. But how fair is this perception? How serious is the need for an initiative like Made Smarter? And what are its chances of success?
Manufacturing in the UK currently accounts for neither the share of employment nor of GDP that it once did. That said, the idea that it has been in a state of morbid decline since the 1940s is incorrect.
The fortunes of British manufacturing have fluctuated since the Second World War, with notable downturns in the 1970s, early 1990s and 2008-9, but – according to the Office for National Statistics – nevertheless achieving an overall increase in output of 1.4% per year since 1948.
In absolute terms the UK is manufacturing more than ever, though its relative share of the economy has fallen as that of other industries and services has grown. The range of things actually made in the UK has also become narrower, or more specialised. If it is no longer a leading producer of textiles, steel or ships, the UK remains an internationally significant manufacturer in the aerospace, automobile and chemical industries.
As the world has changed, and the UK with it, the complexion and scale of British manufacturing have altered too. But, far from being a first-industrial-revolution-age, rundown powerhouse, the UK in fact currently ranks as the world’s eighth-largest industrial nation.
Naturally, there are issues. Compared to the economies of, for example, France or Germany, the UK has historically relied heavily on low-cost, low-skill labour. This represents a structural vulnerability in the manufacturing industry which has been well disguised in recent times by the good availability of inexpensive EU migrant workers.
A reduction in the size of the customary labour pool is a particular threat to British manufacturing performance. And it is not just the UK’s changing relationship with Europe that poses it. The fact that unemployment levels generally have been falling since the 1980s makes recruitment more of a challenge with every year that goes by – unless, of course, the right pay packet can be offered as an incentive.
British manufacturing’s approach to employment has for some time gone hand in hand with a slowness to invest in new plant, machinery and technology. It is almost a vicious circle: as wages become more expensive, there is less capital for deep investment, which in turn reinforces a production model limited by low-tech capabilities.
And yet that automation, digital and data technologies boost productivity is a fact accepted, if only in theory, by UK industry. According to the latest Annual Manufacturing Report published by Hennik Research, over 90% of British manufacturers surveyed agreed that smart factories bring with them improved levels of efficiency. Robots work more quickly, more accurately and for longer hours than humans; sensors monitor and record machine activity, flagging up problems before they become disruptive; and data is analysed in real time to suggest areas in which performance can be optimised.
There are various theories as to why, in practice, British industry has been reluctant to sink capital into automation technology. (According to figures reported by Reuters, the UK in 2016 had fewer industrial robots per 10,000 factory workers than any other G7 country.)
Anxiety about the business climate since the 2007-08 financial crisis is strong in the UK and has, of course, not been relieved by the result of the 2016 EU Referendum.
A mistrust of new industrial technology, particularly as it might impact on the availability of future jobs, also appears to be something of a British tradition; and may both feed and be fed by an educational culture that at the moment sees an approximate annual shortfall of people with STEM skills (science, technology, engineering and maths) of 40,000.
These and other factors have contributed to the slow uptake of automation technology in British manufacturing. Will they continue to do so? Probably not – at least, not in the long term.
After all, current trends suggest that in the end, it might well boil down to simple economics. There is a level on which automation solutions are already undercutting the price tags of large, unreconstructed workforces.
Cobots have begun to play a key role here, and are introducing many small and medium-sized businesses to the possibility of rapid returns on investment (that is, five years or under) – a key reassurance in a business climate habituated to short-termism. No less importantly, these easy-to-work-with devices are breaking down cultural technophobia (where it exists) and the old stereotype that robots are a threat, rather than a complement, to workers on the factory floor.
These are small steps. But the UK’s manufacturing future may well depend upon them. After all, trends set to achieve dominance in the long term such as just-in-time, additive and distributed manufacturing, not to mention the dynamics of frictionless global supply chains, all originated from and continue to develop through automated processes.
The UK’s Made Smarter initiative, then, is probably not exaggerating when it talks of manufacturing needing to join a new industrial revolution. At the same time, it recognises the practical importance of a grass-roots, widely duplicable demonstration of what automation can do for manufacturing – and the equal importance of what a realistic level of investment can do for both.