Businesses and Government must adapt to ensure that manufacturing continues to play a powerful role in the UK economy, as with an ageing workforce, manufacturing will be one of the hardest hit sectors.

Dr Matt Flynn, senior lecturer in Human Resource Management at Newcastle University Business School, contributed to the Government report ‘The Future of Manufacturing: A new era of opportunity and challenge for the UK’.

Published by Foresight in the Government Office for Science, the report states that manufacturing is set to enter a dynamic new phase, driven by rapid changes in technology, new ways of doing business, and potential volatility around the price and availability of resources.

Examining the implications of an ageing society on manufacturing, Dr Flynn and his colleagues found the impact on the workforce could bring about major changes. He said: “Over the next 30 years, there will be 13 million vacancies opening up for several reasons including retirement, but only seven million school leavers to fill them. With an ageing workforce, manufacturing will be one of the hardest hit sectors and manufacturers will need to find new ways to retain and make best use of the skills of its older workers, while recruiting new talent.

“Our research also showed that there are some great opportunities to tap into, in the older labour pools and markets, and UK manufacturing has considerable strengths in sub-sectors like pharmaceutical and food manufacturing where demand is likely to grow as a result of an ageing population.”

Dr Flynn completed the work while at Middlesex University London, managed by the Centre for Research into the Older Workforce (CROW) research group, which partnered with the Helen Hamlyn Trust.

"proud manufacturing tradition"

‘The Future of Manufacturing: A new era of opportunity and challenge for the UK’ report shows that manufacturing currently makes significant contributions to the economy, accounting for over 10% of the UK’s gross value and employing around 2.5 million people. It accounts for more than half of the UK's exports (53%) and around three quarters of business research and development (72%).

In addition, the report emphasises that economies with strong, export led manufacturing sectors typically recover from recessions more quickly than those countries without equivalent sectors.

Business Secretary Vince Cable said: “Britain has a proud manufacturing tradition and the government wants to ensure the sector stays ahead of the curve, leading global innovation and developing, once again, a worldwide appetite for British-made goods. The manufacturing sector is crucial to building a stronger economy – supporting 2.5 million jobs, over half of our exports and about three quarters of research and development. I don’t share the fatalistic view that it will inevitably decline; rather the reverse.

“The Manufacturing Advisory Service provides advice on financial support for businesses, including the government’s £245 million Advanced Manufacturing Supply Chain Initiative and the £3.2 billion Regional Growth Fund. These funds are creating thousands of jobs and leveraging billions of important private sector investment.

“Through our industrial strategy we are giving businesses and investors the long-term security and confidence they need to invest in the UK and drive growth. Foresight’s strategic analysis is a valuable addition to the information available to government and the industry as we plan for the future.”

Looking to 2050

Looking out to 2050, the industry will change considerably by becoming:

• Faster, more responsive and closer to customers:  Advances in technologies such as sensors and 3D printing will ‘digitise’ manufacturing. Production will take place closer to the customer, with potential for local and even mobile manufacturing.
• More than just making and selling a product:  New sources of revenue will become important, with production and technical ‘know how’ critical. For example, Rolls Royce gained 49% of its revenue from services in 2009, and Arcelor Mittal 29%.
• More sustainable:  Manufacturers will need to become more efficient and in their use of materials and energy to counter potential volatility in the price and availability of resources.
• More highly skilled:  There will be around 800,000 manufacturing roles to fill in the years up to 2020 as people retire or move out of the sector. Jobs will be increasingly highly skilled and well paid.

The report urges Government to build on existing initiatives, for example, by scaling up funding for the High Value Manufacturing Catapult Centre, the UK’s key technology and innovation body for manufacturing, to make it even more accessible to small businesses and to enhance the role it plays in connecting academic expertise to industry.

The report also highlights three new areas for Government action, which would build on the Government industrial strategy. These are:

• Better intelligence:  Government policy needs to be informed by data which accurately reflects how manufacturing is connected across the economy and how it is changing.
• Better targeting of support:  The Government has an opportunity to take its industrial strategy to the next level by tailoring policies to specific requirements of industries to support the emergence of new ways of doing business.
• Better capability:  Government needs to keep up with the pace of change in manufacturing. A US-style Office for Manufacturing could help Government draw together intelligence on the sector to inform policy, evaluate the impact of programmes, and inform policy coordination across Whitehall. 

Government Chief Scientific Adviser Sir Mark Walport commented on the report: “The global landscape is changing rapidly, with the rise of new powerful economies like China and India, and the revolution in technology.

“Manufacturing is no longer about just making and selling. It’s about designing, making and serving, with production sitting in the middle and each stage of the process contributing value to the economy.

“To be competitive in the new world, the UK needs to take full account of this and look at manufacturing in an integrated way. This includes recognising the different stages in value creation, keeping up to date with the changing nature of manufacturing and the associated skills needs and how it contributes to the whole economy, and providing a constant policy framework that supports long term decision making.”

(Adapted from the Government Office for Science press release)

published on: 31 October 2013