UK industrial strategy

The UK government’s ‘Industrial Strategy’ for making the UK more competitive and the economy better-balanced essentially involves increasing R&D investment and workers’ skills

It considers five areas for productivity improvement – Ideas, People, Infrastructure, Places and Business environment – and recognises four grand challenges:

  • Artificial intelligence and machine learning
  • Clean growth
  • Future mobility
  • Ageing society

In particular, UK Prime Minister Theresa May has since confirmed her commitment to raise R&D spending to 2.4 % of our national income – an increase of £22 bn over the next 12 years when it increased by just £6.6bn over the last 12 – her aim is to help the UK become “the ideas factory of the future”

So is the strategy working?
The biggest challenges for smaller (SME) manufacturers are poor cash flow, high energy costs, reduced margins, competition from Asia, lack of skills and an ageing workforce i.e. most not listed in the grand strategy
So what help is on offer to these vitally important SMEs?
  • The HVMC – High Value Manufacturing Catapult:
    • The HVMC is a network of seven centres who work with industries, large and small, to prove and de-risk technologies that can be adopted in their own factories to improve productivity and quality
    • It’s funded through the BEIS – Business, Energy and Industrial Strategy Department – and Innovate UK – the national innovation agency
    • It’s tasked with engaging SMEs and measuring the impact of the Catapult on improving SME competitiveness
  • The ‘Made Smarter’ programme, led by Siemens CEO  Jürgen Maier:
    • The programme facilitates the adoption of digital manufacturing technologies such as robotics and automation, augmented and virtual reality, artificial intelligence and machine learning
    • The aim is to unlock big improvements in productivity
    • The approach is to link with existing growth hubs
    • However, some say that while it may eliminate duplication, its success will depend on getting people in post who understand industrial digitalisation and the challenges of change-averse business cultures
  • And, only recently, an independent council has been set up to oversee the delivery of the ‘Industrial Strategy’, headed by Andy Haldane, chief economist at the Bank of England:
    • Haldane is not a manufacturer but qualifies, apparently, because he’s ‘familiar with monitoring government performance on key economic indicators’
    • The council will scrutinise R&D spend, seek to keep the UK economy on track and assess whether the strategy’s aims are being delivered
So the UK might be said to have a productivity plan – expert advisers are in place, universities are being encouraged to join in, professional monitors are watching key indicators, billions have been allocatedWhat could possibly go wrong?

Well quite a lot, actually

For a start, this UK plan addresses a mere 15% of its total economy i.e. the manufacturing sector alone

And David Parker, New Zealand’s Minister for Trade, might well take a different tack – he recently outlined their plan to boost productivity – ‘creating more from our resources while staying within environmental limits’ – and so lift the standard of living of all Kiwis – a suite of sector-led Industry Transformation Plans they copied from Singapore, each one unique to the sector and the actions required, including investment, innovation and skills development:

  • The key industries chosen are agritech, digital technologies, food and beverage, forestry and wood processing
  • They bring together two of NZ’s key competitive advantages – sectoral expertise and the educated workforce
  • The overriding need is to move from volume to value in these sectors
  • There has been too little investment in growing their productive enterprises for competitive advantage

Parker says:

  • “NZ is facing new challenges and opportunities due to technology – the nature of work is being profoundly affected by AI (Artificial Intelligence) and automation, but this is also creating opportunities for businesses who innovate and develop their businesses using such technology”
  • “The higher the productivity of a country, the higher the living standards that it can afford and the more options it has to choose from to improve well-being – well-being can be increased by things like quality healthcare and education, excellent roads and other infrastructure, safer communities, stronger support for people who need it and improved environmental standards”

All splendid food for thought

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