Globalisation is here to stay and will continue to evolve with the changing dynamics of the world in which we live. The influence of globalisation on the manufacturing sector has been tremendous. It is crucial to understand these influencers at play to chart out a future path for sustainable manufacturing. Clearly, the government and industry will need to work in concert to make a meaningful contribution towards continually energising the manufacturing sector.
A 2-year project, aimed at reviewing the long term (out to 2050) strategy for manufacturing in the UK, was helmed by the Foresight Programme in the UK Government Office for Science. The primary objectives of this project were: i) to examine the key drivers of change; ii) to identify future challenges and opportunities; and iii) to advise on how the Government could reposition its industrial strategy for the long term. While the full report is available here, I have summarised the key highlights below.
Stocktaking
- UK exports of goods produced by the manufacturing sector totalled £256 billion in 2012 – nearly 53% of all UK exports
- The UK is the world’s 10th largest goods exporter, with a 2.9% share of global manufacturing exports in 2012
- Throughout 2000-11, 72-79% of total UK business R&D expenditure was associated with manufacturing
- In 2010, 26% of manufacturing businesses with > 10 employees carried out process innovation compared with < 14% for non-manufacturers, and 44% undertook product innovation
- In 2011, remuneration in UK manufacturing was 10% higher in comparable occupations compared with the average across all industries
Forward looking
- Additive manufacturing, digitisation, biotechnology and green chemistry will aid the mass personalisation of products
- Distributed manufacturing might become commonplace
- A sampling of the likely future features of the factories in the UK would include localised & integrated ‘partnering’ (supply chains), innovative and customised buildings (facilities), knowledge based work (people), cross sector R&D (process and practices), Big Data enabled (technology), open, creative, networked and interactive (culture)
- Foreign-owned manufacturing sector might account for a larger share of output by 2020
- Outsourcing and offshoring might continue to fragment the value chain
- Some onshoring (or ‘reshoring’) – repatriation of different strands of production to the UK – is likely to happen
- Emergence of the BRIC (Brazil, Russia, India, China) and NEXT-11* countries over the next few decades will warrant a better positioning of the UK in these countries
- Shift towards sustainable manufacturing of goods
- Demand for sustainable products with minimal environmental footprint
- Emergence of a ‘circular economy’ wherein reuse, remanufacturing, redeployment, recycling, and recovery are practised
- Creating products for ‘collaborative consumption’ i.e. shared use of assets
- Induction of the young generation into the manufacturing industry
- Increased demand for science, technology, engineering, and maths (STEM) qualifications
- Need for a combination of managerial, professional, and technical skills to increase the quality of the workforce
Recommendations for the Government
- Formulating new metrics to capture the value creation, and assess the scale and location of important changes in the manufacturing sector – this will help examine the adequacy of existing policies and role of production in the value chain
- Developing a targeted approach towards the manufacturing value chain by encouraging ‘challenger’ businesses creating disruptive technologies, strengthening those UK capabilities that cannot be easily offshored, generating revenues from manufacturing services, expanding capacity in remanufacturing and resource efficiency
- Employing a ‘systems’ based approach to enable the government in anticipating undesirable consequences of policies, and avoiding those policies which stymie sustainable growth, and consequently, achieve greatest impact
- Expand the government’s ability to evaluate and coordinate policy over the long term by creating an institution (Office for Manufacturing), which will regularly monitor the effectiveness of manufacturing-relevant policies and draw attention to international best practices
As a follow up to this study, the report recommends that the UK government should examine a host of those issues, which affect both manufacturing and industry in the UK. These include institutional infrastructures and systems, increasing the influx of long-term quality capital, and the role of a nationwide movement towards value creation.
*Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam.