What will UK manufacturing look like in the future?

Government report looks at where British manufacturing might stand come the year 2050

New report looks at the future of UK manufacturing
New report looks at the future of UK manufacturing

Most people reading this website would probably agree that manufacturing here is essential if this country is to achieve long term economic growth. However, the rapid changes taking place in the modern manufacturing world could see Britain left behind if it doesn’t keep up with the competition when it comes to new ways of doing business, according to the latest report published by the Government.

The position where we stand today, whilst improving on recent years, doesn’t make for great reading – manufacturing currently contributes £139bn a year to UK GDP and yet most firms are small, with 87% employing less than 20 people.  And whereas 9 million people worked in manufacturing in Britain in 1966, there are less than 3 million today, a decline that has been much more rapid here than  in other developed countries, as can be seen in the graph below.

manufacturing share of GDP
Manufacturing share of GDP 1990-2010

However, the Future of UK Manufacturing report, which was published this week, reveals that there are some great opportunities on the horizon, and if Britain acts now we could be in a position to take advantage of some of the trends that are going to effect the way things are made in the future.

With a growing world population and increased demand for materials, water, energy and land, supply chains will become much more volatile and manufacturing closer to home will make the country more resilient to these effects. Reshoring production, where manufacturers who had previously moved their production overseas bring it back to this country, is already a reality, with it now much easier for Britain to compete with lower cost locations on quality, delivery speed and customisation. Firms such as Hornby, John Lewis and Bathrooms.com have all begun reshoring production over the last 12 months, and many more are likely to follow suit in the next decade or so.

It goes without saying that technology will also play a massive part in the manufacture of goods in the future. Mass personalisation of low-cost products by methods such as 3D printing will enable everyone to become their own manufacturer, and increasingly manufacturing will become more urbanised and less based around large factories with many workers. Companies that do well will be those that make use of ‘big data’ to learn more about their customers and use it to their advantage to improve their products and enhance their competitiveness.

But perhaps the most interesting of  trends are those based around sustainability. Remanufacture, where new life is breathed into old products rather than replacements made, is likely to play a big part in the revenue stream of many manufacturers going forward. Already JCB are selling a comprehensive range of remanufactured parts for its machines and more are likely to follow suit as resources and raw materials become more scarce. Shared ownership of products is also likely to become much more widespread, calling for considerably more durable things to be made. Britain has always been thought of as a place to buy quality and so should be in  good position to take advantage of this.

The UK needs to raise its export performance, particularly to emerging economies
The UK needs to raise its export performance, particularly to emerging economies

One of the more shocking facts set out in the report is that more and more British manufacturers are becoming foreign owned, and that by 2020 it is likely that these firms will account for over 50% of UK output. Is this a bad thing if these companies are still creating jobs for the British people that they employ on their production lines? Well, despite a rise in manufacturing capacity, the increased us of technology will mean that there will be less  people working in manufacturing in the future than there is now.

That doesn’t mean that there isn’t a huge need to find people to work in the manufacturing sector – Over the next 7 years there will be around 800,000 UK manufacturing jobs to fill as people retire or leave the industry. Sir Richard Lapthorne, who lead the team behind the report, describes the situation thus:

“The quality and skills of the workforce will be a critical factor in capturing competitive advantage. It is essential that UK policy makers focus on the supply of skilled workers, including apprenticeship schemes, support for researchers, and the supply of skilled managers.”

But finding people for these jobs may be a hard sell, particularly to young people and woman who are apparently the ones with a negative perception of manufacturing. Yet  jobs in the industry can be both highly skilled and well paid – manufacturing remuneration is generally 10% higher than average UK wages, reflecting the high levels of skills required in the roles.

The report concludes that without a doubt action needs to start now if the UK is to take advantage of the rapid changes taking place in the modern manufacturing world. As well as keeping up with technology, sustainability and training skilled workers, we need to ensure that we are exporting the goods we make to the right countries – sales of our home made goods to developing countries are still lagging behind compared to many of our European neighbours.

Without a doubt there will be a huge transformation in manufacturing over the next few decades which present major opportunities to those who take advantage of it – but will Britain be quick enough off the mark? Let’s hope so.

The Future of Manufacturing report can be read here.