The future of UK manufacturing: solving our productivity puzzle

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Productivity remains central to the economic success of the UK, and with Brexit in our near future, it is more important than ever. Brian Holliday of Siemens discusses a recent consultation that asked the nation’s manufacturers what they consider to be the critical areas to improve the country’s productivity performance.

With the overall longer term ramifications of the Brexit decision still unclear as the country enters a new period of political uncertainty, nonetheless there are many points to consider when it comes to the future of the UK’s strategically important manufacturing sector.

Das Bild zeigt Siemens-Mitarbeiter in der Endmontage beim Einlegen eines Turbinenläufers der Siemens Gasturbine SGT5-4000F. The picture shows Siemens employees in the final assembly hall in the Berlin manufacturing plant while inserting a turbine rotor of the Siemens gas turbine SGT5-4000F.
Siemens employees insert a turbine rotor into a gas turbine SGT5-4000F.

For its part, Siemens remains committed to our business in the UK where we have been active for over 170 years and where today we employ about 14,000 people across 13 manufacturing sites. As a major manufacturing business in our own right, we now urge the government to move swiftly to unify and agree the nature of the UK’s relationship with the EU and other trading partners and create clear roadmaps to encourage future investment.

Manufacturing and productivity

Manufacturing is very important to the UK. It delivers 11% of national GDP and employs 2.6 million people. Government focus on this area, as well as strategic advances such as the creation of the High Value Manufacturing Catapult, the delivery of increased apprenticeship opportunities and successful sector strategies in automotive, aerospace and electronics, are some tangible examples that we are moving in the right direction in efforts to boost economic success.

But, the overarching concern facing all stakeholders remains productivity.

Manufacturing has been identified by EEF – the manufacturers’ organisation, as a key component in solving the UK’s so-called ‘productivity puzzle’. Meeting this challenge is vital as it is through enhanced productivity performance that competitiveness is improved, economic growth is generated, skilled jobs are created and exports are increased.

While many will have a view concerning the critical impact areas on productivity, Siemens was keen to establish what both large and small-sized manufacturing enterprises across varied industrial sectors believe is required to support the fight to improve our national productivity outcomes and underpin economic vibrancy once again.

So we asked them.

A summary of their deliberations is clear and sends a consistent message to policy makers; indeed, it should be considered as the manufacturers’ ‘Blueprint for the Future of UK Manufacturing’.  

The collective thoughts and opinions can be consolidated into three key areas which complement the aims and objectives set out in the Government’s Productivity Plan launched in 2015. They are:

Skills and Human Capital

Manufacturers believe it is vital that an appropriately skilled workforce for the future be both encouraged and developed. Such a UK workforce will require industrial digital skills to take advantage of the productivity opportunities that come with new technology.

Businesses want to see more than the current 3% level of graduates who pursue careers in engineering and technology, and wish to see greater links between business and the UK’s world-leading university sector so that existing and new talent is nurtured to help lead a ‘new industrial revolution’.

Finally, a renewed and funded focus is required for STEM education (science, technology, engineering and maths) so that our schools and colleges proactively start to create the engineers and technicians manufacturing’s digital future will need in abundance.

Economic Infrastructure & Investment

Alongside the positive impact of education and skills, manufacturers are also calling for further encouragement and policy support for increased investment in strategically important areas, including easier access to take-up new technologies in automation and digitalisation – essential if we are to make the most of the opportunities afforded by ‘Industry 4.0’ – the Fourth Industrial Revolution.

There is also a clear wish to see further investment made in critical infrastructure, such as modern transport, energy systems and broadband, as well as a desire for a fresh look at the tax system that could inspire manufacturing commitments to R&D and capital expenditure. Nearly half of those questioned asked for the permanent establishment of R&D tax credits. In tangible terms, the Blueprint calls for the setting of a long-term 3% GDP target for public and private sector spending on research and development.

Ideas and Knowledge

There was a strong belief in the absolute necessity to continue to foster a spirit of innovation in product development and advanced high value manufacturing. This is to allow the nation’s manufacturing base to cost-effectively capitalise on global trends such as the move towards mass customisation.

A clear and consistent message

Educate. Invest. Innovate. These are the key components that drive the nation’s manufacturers’ ‘Blueprint for the Future of UK Manufacturing’ to boost productivity and support a national long-term Industrial Strategy.

Training and educating the workforce of the future, establishing better links between industry and higher education, assisting investment in new technologies such as digitalisation and automation capabilities (the key enabling technologies to support ‘Industry 4.0’) and encouraging innovation based on long-term strategic investment, are all considered essential steps and form the primary action points manufacturers are asking government to focus upon.

Through targeting policies on three areas of its Productivity Plan: Skills & Human Capital, Economic Infrastructure and Ideas & Innovation, government will, for example, see more investment in new innovative digital and smart factories that can tackle the complex production challenges we face. But, the results will be well worth the effort. Estimates indicate that by doing so we will see a 30% overall improvement in productivity, together with the associated benefits of enhanced competitiveness that will aid accelerated economic growth.

Our manufacturers have spoken. We hope our policy makers are listening.

For a full copy of ‘A Blueprint for the Future of UK Manufacturing’ visit: www.siemens.co.uk

Brian Holliday is Managing Director of Digital Factory for Siemens UK & Ireland