Invest in digital skills and innovation to get UK manufacturing firing on all cylinders

digital skills innovation UK manufacturing cylinders

Help from government to invest in new technologies and a better educated workforce top the wish list for UK manufacturing executives, according to a new report from KPMG.

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Almost three quarters (70 per cent) of UK manufacturers surveyed by KPMG said financial support from the Government is needed to help them increase investment in emerging technologies, including artificial intelligence, advanced robotics and augmented reality. Access to a better educated workforce came a close second, with 65 per cent of respondents stating that an improvement in the availability of skilled talent could help them increase productivity in their organisations.

Stephen Cooper, UK Head of Industrial Manufacturing at KPMG, said: “The majority of UK manufacturing executives named financial support for R&D as a top priority from the Government to help them boost their competitiveness and prepare for the digitalisation of manufacturing. Clearly here’s an appetite to embrace emerging technologies, as highlighted in the recent industrial strategy green paper. The UK has an opportunity to position itself as a globally attractive and competitive base for advanced manufacturing.

“At the same time, with the gap between supply and demand of STEM talent in manufacturing set to widen, government, industry and educators will need to act quickly to ensure the manufacturing sector is equipped with the right skills for digitalisation. Digital scientists, digital engineers, digital architects, cyber security engineers – none of these existed 20 years ago. Having access to the right skills and investment will be crucial to ensure Britain’s manufacturing sector unlocks its full potential and remains fit to compete on the international stage.”

In light of the Brexit vote, the report also revealed that, encouragingly, almost
half (43 per cent) of outward investors are undeterred by the uncertainty the vote has created, and don’t believe that it will make it harder to recruit. A third of respondents are considering relocating some of their operations out of the UK over the next three years, while 67 per cent have no plans to move.

Putting this into context, Karen Briggs, Head of Brexit at KPMG, commented: “When our survey was carried out in January, two thirds of respondents expected uncertainty around Brexit. However Britain’s makers are an especially resolute group. Although some are concerned about exchange rates, labour pressures and higher indirect taxation, they are also taking a range of practical measures to prepare. These include partial relocation, supply chain management, increased business development, and new sources of financing. UK manufacturers realise that Brexit will demand a burst of innovation from both the private and public sectors if the UK is really going to reach new global markets and deliver on its potential.”

If faced with rising costs, the majority of respondents (65 per cent) plan to make up for these by either saving costs elsewhere, or by absorbing them, while 35 per cent, expect to pass these on to the customer.

“A focus on openness to foreign investment, access to talent, engagement with new markets, a positive regulatory and legal environment, as well as a coherent industrial strategy will drive the UK to new levels of competitiveness and ensure manufacturers are ready to capitalise on digitalisation. It’s time for a rethink,” concluded Cooper.

 

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Notes to editors:

Link to Rethink manufacturing: Designing a UK industrial strategy for the age of Industry 4.0 report - http://bit.ly/2lGItzR

Further questions discussed in KPMG’s Rethink Manufacturing Survey 2017:

  • If the UK government increases its focus on setting an industrial strategy for the manufacturing sector, would that be a positive or negative development for your organisation?
  • How will the UK's attractiveness as a destination for manufacturing FDI change if the country leaves the EU Customs Union as a result of its Brexit negotiations?
  • In the next three years, how do you expect the amount of R&D your organisation conducts in the UK to change?
  • How would you describe the UK government's current approach to regional development?

About KPMG’s Rethink Manufacturing Survey 2017

KPMG commissioned in-depth interviews and extensive survey research among FTSE 100 and FTSE 250 UK manufacturing executives. The aim of the research is to understand how they anticipate the impact of Brexit on their organisations, and their priorities for a long-term and coherent industrial strategy from the Government.  

Over half of our 205 respondents are CEOs, Managing Directors or Heads of Departments, providing us with reliable results about the opinions at the core of the manufacturing industry. Almost half of respondents are suppliers of products direct to the customer, while 16 per cent supply intermediate products or components to others who perform further processing. 34 per cent supply a mix of the two. 

The survey was conducted online and took place between December 2016 and January 2017.

For media enquiries please contact:

Jo Chileshe, KPMG Corporate Communications
T: 0121 232 3343
M: 07919 211 803
E: jo.chileshe@kpmg.co.uk

Follow us on twitter: @kpmguk

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff.  The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such. 

 

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