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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.

Comments

11 Comments

  1. Michael on November 1, 2013 at 4:18 am

    The report’s findings need to be tatooed on the forhead of every politician and bureaucrat who clearly are completely ingnorant of what local manufacturing contributes to the nation’s financial and social wellbeing. Mouthing platitudes when elections are on the horizon and falling over themselves to fund overseas screwdiver plants, enriches other nations and does little for long term employment, skill development or the UK taxpayer’s pockets.
    I would argue that it has become ingrained in the ruling elite’s psyche, that making things is a dirty business and beneath their dignity, and they have successfully avoided having anything to do with it since the the second world war, other than to contribute to denuding the whole nation of its industrial base.
    Britain can make things-beautiful and useful things, but they need a visionary ruling elite who understand and are willing to help not impede a resurgence in home grown and owned manufacturing.
    To achieve that goal, the voters will probably have to empty the Parliament completely of the dross that has filled the chambers- government and opposition, and elect those with real talent who understand and will do what needs to be done.

  2. Stuart Wright on November 1, 2013 at 8:09 am

    For Hi-Tech manufacturing to survive in the UK it must be protected by the government.
    We have to have a level playing field.
    I have worked in the electronics industry all my life and exported British equipment to Asia for manufacturing products such as mobile phones, computers automotive components. Those factories could be in the UK, The labour content is relatively low because the production lines are mostly automatic. The jobs in these facilities are well paid. The production line equipment is often imported (although much less now). The raw materials like copper and oil have a global price.
    Why are these factories not in the UK? Because we don’t have a government that subsidises factory running costs, we don’t have a government that imposes an import duty on goods that we could and should make in Britain and we don’t have a government that bans technology transfer out of the country.
    Three years ago the British company that I worked for was bought by an overseas giant for pennies, they have since transferred all of the designs and technology to Japan and sell all UK made parts to an overseas office at cost thus avoiding paying any corporation tax here.
    The biggest joke is that the sale of the company would have boosted the UK’s export figures and our government would have seen it as tremendous success!

  3. Ashley Morrison on December 6, 2018 at 3:10 pm

    I run a small firm which retails lockers and storage equipment across the UK and around the world.
    We are in competition with companies from China and Europe. The common theme that I see is that they all seem to get far more governmental support than we do. I’m keen to start manufacturing here but the support both financial and practical falls way behind those I’m up against elsewhere.
    I’m not sure what the UK business landscape will be like post brexit but one thing is for certain, we’ll need to start making things again.

  4. Tim Moss on December 3, 2019 at 11:53 am

    I definitely agree with some of the comments on here as we need our government to put more emphasis on promoting manufacturing within the UK. Britain seems to have become a services focused economy which is bad in the long-term as we need to be manufacturing goods to be a thriving economy.

    • curtis carpenter on December 28, 2019 at 10:48 pm

      Its to me understanding how manufacturing will contribute to sustainable economic growth.

      Look on Wikipedia and the website the manufacturer. UK manufacturing will increase and enter the top 5 within 2 years. According to the manufacturer for example.

  5. curtis carpenter on December 28, 2019 at 10:42 pm

    I think we need to manufacture more from a more diverse range of products and thus consider a more diverse range of manufacturing approaches. Build supply chains with larger manufacturing nations, buy cheaper raw materials from South America and Africa, improve the quality and therefore the competiveness of what we produce. Attract larger manufacturers with individual incentives, Britain’s biggest manufacture is Tata Indian company. Running state run companies would bring good government control to growth within the industry.

    I think if we also export more especially establishing demand to add purpose to our current rates of production by selling to India’s 300 million middle class consumers, to America who has 5 times the consumer spending of Japan and China home to Tencent and Alibaba the worlds top retailers, meeting demand would only be a purpose driven task. And which to add I think can be accomplished in seamless ways but to mention one superficially I think that we could all learn from is the 80/20 rule.

    Profit Maximisation I think is vital for reinvestment and investment in Research and development especially to recover from losses faster and pay off debt, securing the stability of the industry.

  6. Curtis Carpenter on February 13, 2020 at 12:20 pm

    Manufacturing is vital for sustainable economic growth but we need to understand how to increase the level of industrial development knowing how the marked improvements we make now will influence the long term, increase product quality through investing into improving skills within labour and craftsmanship, increase both demand through reduced trade barriers and increase productivity through deregulation allowing for companies to set their own standards towards increasing output while decreasing waste, rejects and pollution.

    The UK according to the website manufacturer.com will enter the top 5 biggest manufacturing nations.

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