How the UK Government can ensure digital manufacturing fund success

The UK government recently announced a £53 million fund for digital manufacturing, with an aim to develop and leverage new technologies to boost innovation and competitiveness across the manufacturing sector. The money will be used to create five digital manufacturing research centres, a digital supply chain innovation hub, and to fund 37 industry projects.

The government has rightly identified manufacturing, AI and advanced computing as key areas where the UK can demonstrate global leadership in R&D and industrial strength, so there’s no doubt the investment is a welcome step towards making that a reality. However, as the country plunges towards a supply chain crisis, and British manufacturers grapple with shortages in the wake of the pandemic and Brexit, on top of facing significant talent squeezes and skills gaps, it’s clear the challenge is a big one, and this fund is just the start.

With this in mind, below are some thoughts on priority areas that need focus to propel the UK manufacturing sector in both the short and the long term.

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Digital transformation of manufacturers’ legacy building

The government needs to make sure it doesn’t overlook legacy businesses as part of its digital manufacturing strategy.

There is a risk that this new funding only flows to exciting new startups, and while they certainly need support, it should not be at the expense of established manufacturers getting the vital help they need to digitally transform. After all, these businesses are a key pillar of the UK economy, so it is in the country’s best interest that they seamlessly adapt to technological change, and not be disrupted by it. Neglecting a group of companies that hold a combined value of £396.6 billion and account for a quarter of UK GDP, would not be wise.

These are experienced manufacturers, trusted by customers, and the government needs them to advance its Global Britain agenda, especially in a post-Brexit world. They should be at the centre of Industry 4.0, and supported in accelerating AI and advanced manufacturing adoption. The overall sector and the wider economy stands to benefit greatly from this innovation boost through increased productivity, efficiency and growth.

Mind the skills gap

The manufacturing skills gap is a very real issue. As the workforce ages, skills shortages are being exacerbated by knowledge loss and an inability to keep pace with the need for new digital skills.

Staff shortages also mean businesses are struggling to meet demand, and threatening economic recovery. In fact, the CBI has warned labour supply problems affecting the UK could last for up to two years, causing significant damage to the manufacturing industry.

The government needs to act now to avoid a talent and skills deficit overwhelming the industry. One approach could be to better target the lifetime skills guarantee, which offers free further education and a national skills fund, at occupations experiencing shortages. This would help job seekers retrain for the most in-demand jobs in manufacturing.

In the long term, the government’s plans to build research centres across universities should help create an awareness of the potential for a career in manufacturing and help fill a pipeline of new young talent.

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Tech makes reshoring viable

COVID-19 has highlighted just how vulnerable supply chains are, and while Brexit has added extra complexities for the UK, it is truly a global issue.

The government’s plans for an innovation hub are a good start. However, to ensure long-term security of supply chains we need to bring at least some production home. Thanks to new technologies dramatically reducing manufacturing costs and overheads, reshoring is fast becoming a viable option across industries.

However, while larger manufacturers and retailers are actively exploring reshoring production, it still may be cost prohibitive for smaller businesses so they would likely need state support.

The government’s funding does promise to boost innovation and digital transformation in the industry, helping to cement Britain’s leadership position on the global stage, but it should just be viewed as part of a wider strategy to drive advanced manufacturing in the UK over the long term.

Written by Saar Yoskovitz, co-founder and CEO of Augury

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