Building the new economy

The United Kingdom manufacturing sector has been motoring ahead in recent years, climbing from 11th in 2012 to ninth in 2014 in the global rankings. The sector is on the cusp of the fourth industrial revolution, ushering in new technologies and techniques that will change the products, processes and relationships involved in manufacturing.

While the sector has hit a period of uncertainty following the outcome of the European Union referendum, faced with this pace of change happening globally, it cannot afford to stand still.

In Europe, Germany (Industrie 4.0), France (Industrie du Futur), Sweden (Produktion 2030) and Italy (Fabbrica Intelligente) are all actively taking an interest. The EU is also spearheading a series of work streams with the aim of incentivising bottom up activities under the guise of its Digitising European Industry programme.

But what do manufacturers in the UK make of this transformation?

This transformation is crucial for the sector, 61 per cent of manufacturers agree they could be using digital technologies more to boost their levels of productivity.

Manufacturers view the core to all of this as being about connectivity, using real time information flow to discover new insights from data and acting upon those insights quickly to create value.

They also say the pace of change will be a three step process, through conceptualising the realm of possibility from a unique business context, to optimising or evolving existing processes before a revolution is ushered in with business models fundamentally changing.

There are many different benefits to this transformation. In the short term the focus will be improved operational efficiency through better use of capital, workers and resources. Over the medium term the transformation will unlock new products, services and business models that will allow value to be added and captured in different ways.

Debates rage about what the benefits in the future may be, but will include a move towards an ‘autonomous, pull economy’ with end to end autonomous decision making by machines, continuous demand sensing and more optimised use of resources.

We are at the dawn of the transformation of industry, but some potential roadblocks have already been identified:

1) Digital connectivity – unreliable internet connections will be a literal roadblock, with the UK lagging behind in the rollout of fibre to the premise. Rural areas have also been left behind in existing broadband rollout

2) Data security – cyber threats will be a psychological roadblock, with the risk of data breaches and manipulation potentially putting off companies from fully embracing change

3) Staff skills – retraining and upskilling to approach design and production in different ways will be required, in particular

4) Interoperability of technologies across different systems and platforms – to allow supply chains to join up seamlessly across geographic borders

The government has a role to play in helping to drive up the take up of new technologies and techniques including funding support for ‘living labs’ of technology demonstrators and grant support to help de-risk early stage adoption of technologies. The forthcoming autumn statement and industrial strategy is the ideal place to help the sector maintain its international competitiveness.

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Christopher Richards is senior business environment policy adviser at EEF. He tweets at @theChristophe

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JOIN US FOR …

Building the new economy: How can Labour position itself for the fourth industrial revolution?
Monday 26 September, 12.45-2pm, Comedy Central, 17 Edward Pavilion, Liverpool L3 4AF

This event will discuss how with Britain’s economy rapidly changing in an increasingly globalised world Labour can best position itself to represent those who may be adversely affected by the new economic landscape as well as helping to promote the growth in the economy that is needed.

This event is in partnership with EEF, the manufacturers’ organisation. 

Speakers: Rachel Reeves MP Peter Kyle MP | Terry Scuoler, Chief executive, EEF Owen Jones, Columnist, the Guardian | Chair: Nita Clarke, Director, the IPA

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