As the UK falls behind its global competitors in innovation and productivity, Verity Davidge, Policy Director at Make UK, warns that it must increase uptake of automation, robotics and AI to compete, and doing so will mean upskilling the British workforce.
British manufacturing companies have been lagging behind international competitors in the use of automation over the last two decades, with manufacturers falling dramatically down the global league tables. Our use of robotics and AI systems is poor, with training of people in relevant digital skills to take advantage of the innovation tech well below what is needed to catch up.
A new report, Making it Smarter: Global lessons for Accelerating Automation and Digital Adoption in UK Manufacturing[i], launched by Make UK and Sage reveals that nearly half of British manufacturers identify a lack of technical skills as the biggest hurdle to improving their use of innovative advanced technologies. Projects embarked on often stall after implementation stage because companies cannot find the support needed. Countries where all SME innovation funding and advice is held under one easy-to-access ‘umbrella hub’ have dramatically higher success rates.
The Government’s recent Industrial Strategy sets out how it will create a digitally literate workforce by 2035, but we simply can’t wait ten years for this to happen. Make UK is calling on Government to embed targeted funding for digital skills needed in manufacturing and engineering to accompany the existing £100m already set aside for engineering skills.
For decades, South Korea has been undergoing a successful automation drive to transition from legacy production methods to advanced digitalised factories. It has stuck religiously to a single strategy, concentrating on education, infrastructure and innovation. The Government provides SMEs with bespoke incentives, offering easy to access R&D tax incentives of 30% for companies investing in semiconductor facilities, and broader tax credits guaranteed to 2029 and beyond. This certainty and confidence has led to South Korea turning into a global leader in the production of semiconductors and other advanced technologies.
The South Korean Government also saw the need to make education work for industry – providing the employees to power the technologies. It committed to training 40,000 people to operate fully automated production systems and there are now no skills shortages in technical and digital innovation. The rewards are high; firms adopting smart technologies see a 25% increase in productivity and a 27% drop in defects.
Singapore underwent a similar transformation and is now a global leader in high-value advanced manufacturing, concentrating on the lucrative semiconductor market, precision engineering, pharmaceuticals and clean energy. Singapore’s pro-innovation environment delivers some of the most generous R&D tax incentives in the world, where companies can claim up to 400% tax deductions on local R&D or opt for a 20% cash payout. The incentives are embedded in a long-term industrial policy, giving SMEs and start-ups greater cashflow certainty, and the ability to grow to their full potential.
Germany has stayed top of the international performance leagues consistently over the last decade. It’s success is largely driven by embedding research institutions into local industry, with a particular focus on SMEs. Overall, Germany’s successful approach blends SME-only tax relief, sector-specific research and regional accessible digital support.
With a population no larger than London’s, Switzerland delivers a manufacturing output of around £150 billion — astonishingly close to the UK’s £217 billion. This remarkable productivity stems from a national strategy that prioritises advanced technologies, SME competitiveness and long-term innovation. The Swiss Innovation Agency typically funds up to 50% of eligible project costs for SMEs, while larger firms only qualify if they partner with smaller ones.
If UK Manufacturing is to improve its competitiveness then this shortfall in the use of automation must be addressed.
[i] https://www.makeuk.org/insights/reports/making-it-smarter-global-lessons-accelerating-automation-digital-adoption-uk
