Businesses and government must adapt to ensure manufacturing continues to play a powerful role in the UK economy, or they risk being left behind by international competitors, according to a new report published today (30 October 2013).

'The Future of Manufacturing: A new era of opportunity and challenge for the UK' published by Foresight in the Government Office for Science, states that manufacturing is set to enter a dynamic new phase, driven by rapid changes in technology, new ways of doing business, and potential volatility around the price and availability of resources.

The report shows manufacturing currently makes significant contributions to the economy, accounting for over 10% of the UK's gross value and employing around 2.5 million people. It accounts for more than half of the UK's exports (53%) and around three quarters of business research and development (72%).

In addition, the report emphasises that economies with strong, export-led manufacturing sectors typically recover from recessions more quickly than those countries without equivalent sectors.

Looking out to 2050, the industry will change considerably by becoming:

Faster, more responsive and closer to customers: Advances in technologies such as sensors and 3D printing will 'digitise' manufacturing. Production will take place closer to the customer, with potential for local and even mobile manufacturing.

More than just making and selling a product: New sources of revenue will become important, with production and technical 'know how' critical. For example, Rolls Royce gained 49% of its revenue from services in 2009, and Arcelor Mittal 29%.

More sustainable: Manufacturers will need to become more efficient in their use of materials and energy to counter potential volatility in the price and availability of resources.

More highly skilled:There will be around 800,000 manufacturing roles to fill in the years up to 2020 as people retire or move out of the sector. Jobs will be increasingly highly skilled and well paid.

The report urges government to build on existing initiatives, for example by scaling up funding for the High Value Manufacturing Catapult Centre, the UK's key technology and innovation body for manufacturing, to make it even more accessible to small businesses and to enhance the role it plays in connecting academic expertise to industry.

The report also highlights three new areas for government action, which would build on the government's industrial strategy. These are:

Better intelligence: Government policy needs to be informed by data which accurately reflects how manufacturing is connected across the economy and how it is changing.

Better targeting of support: The government has an opportunity to take its industrial strategy to the next level by tailoring policies to specific requirements of industries to support the emergence of new ways of doing business.

Better capability: The government needs to keep up with the pace of change in manufacturing. A US-style Office for Manufacturing could help government draw together intelligence on the sector to inform policy, evaluate the impact of programmes, and improve coordination across Whitehall.

Business Secretary Vince Cable said:

"Britain has a proud manufacturing tradition and the government wants to ensure the sector stays ahead of the curve, leading global innovation and developing, once again, a worldwide appetite for British-made goods. The manufacturing sector is crucial to building a stronger economy – supporting 2.5 million jobs, over half of our exports and about three quarters of research and development. I don't share the fatalistic view that it will inevitably decline; rather the reverse.

"The Manufacturing Advisory Service provides advice on financial support for businesses, including the government's £245 million Advanced Manufacturing Supply Chain Initiative and the £3.2 billion Regional Growth Fund. These funds are creating thousands of jobs and leveraging billions of important private sector investment.

"Through our industrial strategy we are giving businesses and investors the long-term security and confidence they need to invest in the UK and drive growth. Foresight's strategic analysis is a valuable addition to the information available to government and the industry as we plan for the future."

Machining by HELLER

Machining by HELLER

Government Chief Scientific Adviser Sir Mark Walport also commented on the report:

"The global landscape is changing rapidly, with the rise of new powerful economies like China and India, and the revolution in technology.

"Manufacturing is no longer about just making and selling. It's about designing, making and serving, with production sitting in the middle and each stage of the process contributing value to the economy.

"To be competitive in the new world, the UK needs to take full account of this and look at manufacturing in an integrated way. This includes recognising the different stages in value creation, keeping up to date with the changing nature of manufacturing and the associated skills needs, and providing a constant policy framework that supports long-term decision making."

Sir Richard Lapthorne CBE, Chair of the Project Lead Expert Group, said:

"Manufacturing in 2050 will look very different from today and will be largely unrecognisable from 30 years ago.

"Successful firms will be highly adaptable, capable of regularly reconfiguring their physical and intellectual infrastructures, exploiting strong international linkages, and adapting their business models.

"The implications for industry and government are substantial – the UK will need to introduce radical changes and adapt its behaviours to ensure that it is not left behind."

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