Manufacturing is and will remain a major contributor to economic activity and employment in most parts of the UK and drives innovation by introducing new products and processes.
It is critical to the nation’s economic prosperity, a fact that the regional development agencies (RDAs) are highly conscious of.
Manufacturing now accounts for 16 per cent of the UK’s gross domestic product (GDP), is responsible for more than half of UK exports and undertakes 75 per cent of all business research and development.
It involves significant contributions from activities counted in the services sector, including R&D, engineering, finance, advertising, maintenance, logistics, and other business-oriented functions. Effectively it is feeding many of the thriving service industries in the UK economy.
In the West Midlands, manufacturing has probably more of a legacy than anywhere in the UK, if not the world. The area has long been known as the heart of UK manufacturing. The region was the birthplace of the industrial revolution and spawned a generation of innovations that changed the world for ever, including the microwave, LCD and laser technology, fuel cell technology as well as important life-saving medical developments.
More than 20 per cent of West Midlanders work in manufacturing compared with 15 per cent nationally and the sector accounts for a quarter of the region’s GDP.
However, although the significance of the industry is expected to continue, direct employment in manufacturing is likely to fall from 535,000 in 2000 to 406,000 in 2010.
Manufacturing productivity in the West Midlands is now among the lowest of any UK region. Compared with other manufacturing economies, our companies do not invest enough in capital equipment while generally our workers are less skilled than our competitors.
Also, companies have not adapted to new ways of working in terms of how they are organised and how they use technology, for example innovation-based business strategies supported by knowledge management systems and rapid product development.
Many of these challenges are faced by all regions and the RDAs have been charged with finding a solution to many of these issues.
Nationally, the Manufacturing Advisory Service (MAS) has served an important role in providing a one-stop shop for manufacturing businesses. The West Midlands MAS has become the most successful in the UK and its role as a recognised and respected industry body is reflected in its inclusion in the new integrated regional Business Link.
Across the UK, MAS is helping to make companies more efficient and to diversify into new industries and sectors.
The West Midlands is focusing on developing projects that have specific relevance to higher value-added sectors such as aerospace and medical technologies while seeking to exploit and disseminate the results into other manufacturing sectors.
These include the International Automotive Research Centre at Warwick Manufacturing Group, which is working to create a world-class facility for the development of automotive technologies and processes for use by the industry and its supply chain.
MAS has also established the industry-led Beacon Manufacturing Group to identify and address the strategic needs of manufacturing and promote the west Midlands as the leading manufacturing region in the UK.
The Inside Manufacturing Enterprise (IME) scheme aims to increase the understanding and image of manufacturing. The project operates in the region as a regional company-visit programme in conjunction with MAS-WM. Its primary objective is to allow businesses and schools to experience best practice with some of the best manufacturing innovators in the west Midlands.
Since it started IME has worked with 55 host companies throughout the West Midlands and has had more than 400 visitors. A total of 185 companies have attended while 1,000 young people have taken part in the programme, supported by 40 business hosts.
Across the board, manufacturing is transforming, rather than declining. The challenge for the RDAs is to make this transformation as smooth as possible.
Richard Hutchins is director for economic development at Advantage West Midlands, the West Midlands RDA
Regional development agencies have a key role in transforming manufacturing, says Richard Hutchin.