the future of manufacturing - prof. sir michael gregory

The Future of

Manufacturing: A new era of opportunity

and challenge

Professor Steve Evans, University of Cambridge

2

Scope

Foresight Future of Manufacturing Project

Objective has been to investigate changes and

uncertainties facing UK manufacturing activities,

to 2050 where possible, to inform how the UK can

create and capture future value.

Vince Cable is the sponsoring minister. Findings

available for BIS to use to inform development of

future policy.

3

• 10% of UK

economy

(1973: 29%)

• Employs under

3m people

(1966: 9m)

• Similar trends

elsewhere

Manufacturing share of GDP 1990-2010

A recent context of historical shifts…

Foresight Future of Manufacturing Project: 7th November 2013

4

With areas of weak

relative performance…

...and some areas of strong

relative performance

Share of manufacturing exports in manufacturing output

• Strong total factor

productivity

• Increasing proportion

of output exported

• Expenditure on

manufacturing R&D

• Levels of capital

investment

• Falling share of global

exports

Foresight Future of Manufacturing Project: 7th November 2013

5 Share of manufacturing exports in manufacturing output

• Absolute value: 10% of GDP (£139 bn in 2012)

• Exports: 53% of UK exports in 2012 (£256 billion)

• R&D: 72-79% UK business R&D spend 2000-11

• Productivity: growth 2.3% p.a. (1980-2009) UK 0.7%

• Jobs: high skilled and well paid

• Resilience: provides resilience in face of recession

The sector makes powerful

contributions to the UK economy

Foresight Future of Manufacturing Project: 7th November 2013

6

Timetable

Scoping Jan-Mar 2012

Research Apr 2012-Feb 2013

Synthesis Launch Feb-Jul 2013 28 October 2013

• 37 commissioned evidence papers, 2000+pages

• 3 international workshops

• Engagement with industry

• UK roundtable events

• Lead Expert Group

• Industry High Level

Stakeholder Group

• Drafting of chapters

• Engagement with

BIS & HMT

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Changing nature of manufacturing

By 2050:

Manufacturing will

be a complex,

value creating

system. Emphasis

not on production

or services but on

flexing business

models and

offerings to create

value in new and

interesting ways.

8

Technological change and uncertainty

By 2050: technology will drive a revolution…

• Incremental leaps forward

(pervasive ICT; integration of

sensors = big data; application of

materials; sustainability)

• Radical developments (biological

& medical developments; additive)

• Disruptive breakthroughs (unknown)

…changing how products are designed, offered

and used by customers

9

Environmental change and uncertainty

By 2050: sustainability will no longer be optional…

• Resources (materials, water, energy, land)

• Population (3 billion more people) wealth / age

• Climate change (weather events)

• ‘Pricing the Environment’

• Standards

• Consumer pull

…business models

will have to shift to

reduce exposure to

commodity shocks &

exploit opportunities

10

Sociological change and uncertainty

By 2050: we will have seen jobless growth…

• 170k fewer roles by 2020, no return to mass cuts -

current employment levels just under 3 million

• 800k roles to fill by 2020 (ageing population a factor)

demand for professionals, ‘hybrid’ expertise, STEM

• Potential for cognitive / physical enhancement?

…with strong demand for workers with ‘hybrid’

expertise as countries compete on quality

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Employment

5 areas of long term shared interest emerged from

workshops in Berlin, Washington DC and Singapore:

• Sustainability (emphasis on resource efficiency)

• Education and skills

• Automation

• Big data

• New models of distributed manufacturing

Interests highlight fascinating balances:

(1) Investment in automation versus jobs

(2) Global versus local supply chains

(3) Distributed versus traditional manufacturing

11

International perspectives on

change and uncertainty

12 Share of manufacturing exports in manufacturing output

• Services with products e.g. Rolls Royce

• Selling of technological ‘know how’ e.g. ARM

• Remanufacturing of products e.g. JCB / Caterpillar

Manufacturers will increasingly make use of a wider

value chain to create revenue.

1. More than making a product and selling it

Foresight Future of Manufacturing Project: 7th November 2013

13 Share of manufacturing exports in manufacturing output

#FoMn #manufacturing

2. Faster, more responsive and closer to customers

• Mass personalisation of products on demand

• Distributed: big high-tech, modular, home, mobile

• Greater design freedom

• More digital connections along value chains

Foresight Future of Manufacturing Project: 7th November 2013

14 Share of manufacturing exports in manufacturing output

#FoMn #manufacturing

3. Exposed to new

market opportunities

• Changes to personal wealth / ageing populations

• BRICs and the ‘Next 11’

• Continued global ‘fragmentation’ of the value chain

• Some ‘onshoring’

Foresight Future of Manufacturing Project: 7th November 2013

15 Share of manufacturing exports in manufacturing output

#FoMn #manufacturing

4. Increasingly dependent

on highly skilled workers

• Strong demand for manufacturing workers

• A need to accommodate more older workers

• Importance of STEM qualifications

• Blending of technical & commercial ‘hybrid’ skills

• Potential for human enhancement

Foresight Future of Manufacturing Project: 7th November 2013

16 Share of manufacturing exports in manufacturing output

#FoMn #manufacturing

5. More sustainable

• Growing / urban populations raise resource demand

• Climate change and global supply chain vulnerability

• Volatility in price & availability of commodities

• Reuse, remanufacturing, recycling: circular economy

Foresight Future of Manufacturing Project: 7th November 2013

Foresight Future of Manufacturing Project: 30th October 2013

Future of manufacturing

• Lean & Clean: (eco)-efficiency

• Never can say goodbye: closed loop

• Make it anywhere: local making

• Keeping in touch, experiments, selling service

• Knowing me, knowing you: using big data

• Kissing frogs: new collaborations

• Slow making, provenance, high value

this is a personal (Steve Evans) picture