Report: UK manufacturing investing significantly in digital tech

The UK manufacturing industry has taken a significant step in adopting digital technologies, with 80% confident Industry 4.0 will be a reality in their businesses by 2025.

This is according to new research, Bouncing Back Smarter: Innovation Monitor 2020 published today by Make UK and Infor.

The use of 3D printers, AI, Internet of things, augmented and virtual reality are making a real contribution to business operations across companies of all sizes – especially around the recent need for remote production and monitoring – but a significant number of SMEs remain at the digital starting block.

The two years since the last innovation monitor have seen little change in the barriers to digital adoption, particularly for SMEs – lack of skills and technical knowledge remain top of the list but scarcity of finance is becoming a more significant block, with companies stretched due to loss of business caused by the pandemic.

But a lack of knowledge of available government schemes, and an absence of targeted digital implementation help for SMEs is further holding back progress. Other countries like Germany and Japan have extensive support systems in place to help manufacturing SMEs modernise – giving them a significant boost to their international competitiveness.

While manufacturers are aware of the benefits of digital technology, the report found 44% are not yet adopting them.

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Regional variation is also stark. The government’s Made Smarter pilot in the North West has been impressive in terms of digital adoption – with 20% of small businesses in the area already at the highest level of adoption. This is second only to the South East at 33%.

The pilot programme provides a comprehensive package of SME digital support: financial help for digital investment purchases; access to a complete advisory service to ensure the right choice of technologies and training in how to use them to best advantage. Support for change management skill building is also an integral part of the Made Smarter programme.

The research shows clearly that this model is working, making a strong case for national rollout. The West Midlands is a prime example where its large proportion of traditional engineering manufacturers mean a very high proportion of companies have done nothing about digitalisation (18%) with only 9% at the highest technical revolution phase of implementation.

Performance in Wales too is also notably below average, with a quarter of manufacturers not yet considering digitalisation and none at the highest level of development.

The COVID-19 crisis has renewed the focus on resilience, creating significant opportunities for investment in digital technology. However, the pandemic will hit many manufacturers’ spend on in-house R&D with two-fifths planning to decrease investment, so access to bespoke advice to choose the most appropriate technologies is a must to enable businesses to make the best choices.

Related: How Rishi Sunak’s latest measures can help UK manufacturers

Fiscal incentives to support digitalisation and R&D spend must be increased, starting in the forthcoming budget, the report says.

Additional investment allowances for technology related investments would be a good way of doing this. But industry too must play its part in delivering a strong digital future for British manufacturing. Manufacturers, particularly SMEs, must accept that digitalisation is for everyone, and make it a strategic priority to maintain Britain’s competitiveness on the global stage.

Stephen Phipson, CEO of Make UK, said: “In recent months manufacturers have faced unprecedented challenges with the need for Industrial Digital Technologies never more important. Remote working, whether that be monitoring of equipment or remote production processes, have without doubt been the saviour of many companies. Digital programme rollouts have been achieved in a matter of months when such change would normally have taken years to achieve.

“In the coming months, as supply chains return to normal, it is important to build resilience and further accelerate digital adoption to give UK manufacturing that turbo charge to deliver even greater international competitiveness. Digital adoption allows companies to work as effectively and efficiently as possible and it is vital Government steps up to work with industry to make sure Britain’s smaller and often most innovative companies get that bespoke help they need to make the most of the technologies available to them.”

Make UK www.makeuk.org