Intelligent manufacturing: an industrial revolution for the digital age

Contents3 Executivesummary

6 FromThirdtoFourthIndustrialRevolution

9 Twoalternativefutures

12 Weighingupthebenefits

14 Investmentplansandobstacles

16 Aneyeonthehorizon

18 Strategiesforsuccess

19 Casestudies RadnorHills EnviroVent ArlingtonIndustries

24 Keytakeaways

25 Abouttheauthor

About the research

TheBarclaysCorporateBankingManufacturingReport,Intelligent manufacturing,isbasedonasurveyconductedbyOpiniumandEconomicModellingconductedbyDevelopmentEconomics.Thesurveyof508decisionmakersinthemanufacturingindustrywasconductedinSeptember2017.

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Executive summaryAnewindustrialrevolutionisunderway.Itissettodrivethetransformationofmanufacturingacrosstheworld.

ThischangebuildsontheautomationthatcharacterisedtheThirdIndustrialRevolution,butgoesfarbeyond.Itmeshesindustrialprocesseswithbreakthroughsinadvancedtechnologiessuchasdatamanagement,machinelearningandtheInternetofThings.

CapitalisingonthismovementcouldenableUKmanufacturingtoaccelerateitssluggishrecovery,accordingtoournewanalysis.Ithasthepotentialtoimproveglobalcompetitivenessandaddressthenotoriousproductivitygap.However,UKmanufacturers’investmentinexistingtechnologylagsbehindthatofourrivals.

Ourresearchexploresmanufacturers’appetiteandabilitytoinvestinadvancedtechnologies.WeconsiderthebarriersfacedbyUKindustryinbeingpartofthenextrevolution–andweassessthepotentialbenefittotheeconomyiftheseobstaclescanbeovercome.

Ourmodellingsuggeststhesegainsaresignificant.Theyincludeadditionalgrowthof15%withinadecade,andmorethan100,000extramanufacturingjobs.WealsolookattwoUKmanufacturers’practicalexperiencesandanalysetheimpacttheyseethisrevolutionhavingontheirbusinesses.

Thechallengeison

ThemanufacturingsectorcontinuestobevitaltotheUKeconomy.Outputhasrecoveredslowlyoverthepastfewyears,thoughitremainsbelowpre-recessionlevels.Afterasharpdeclinebetween2007and2010,employmentinthesectorhasstabilisedataround2.7million.

In2016thenumberofmanufacturingbusinessesincreasedtoover133,000–surpassingthenumberin2008forthefirsttime.1Smallbusinessespredominate.Meanwhile,firmshavesteppedupcapitalinvestment:thisfiguredoubledbetween2010and2015.However,theUKhasslippedintheworldrankingofmanufacturingnations.Fromaconsistentplaceoffifthorsixthinthetotaloutputleaguetableinthedecadesupto2004,itnowrankseighth.2

Ourindustryisalsocharacterisedbypersistentlypoorproductivity.Intermsofoutputperworker,theUKwas16.6%belowtheaveragefortherestoftheG7nationsin2015.3

Thisproductivitygapwashighlightedagainearlierthisyearinthegovernment’sIndustrialStrategyGreenPaper,whichalsounderlinedregionaldisparities.Thegovernmentsetout10prioritiestodrivemanufacturinggrowth,thefirstofwhichwasinvestmentinscience,researchandinnovation.

Amongthosewhohavealreadyinvested,overhalfreportthatthetechnologieshaveimprovedproductivity.

1www .ons.gov.uk/businessindustryandtrade/business/businessservices/bulletins/uknonfinancialbusinesseconomy/previousReleases

2www .eef.org.uk/about-eef/media-news-and-insights/media-releases/2017/sep/british-manufacturing-continues-climb-up-global-rankings

3www .ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/bulletins/labourproductivity/jantomar2017/relateddata

£102bn perannumadditional

revenuesformanufacturers

101kadditionaldirect

jobs(44,000indirectjobs)

GrossValueAdded(GVA)by

£31.6bn perannum

By2026 enhancedinvestmentin4thIndustrialRevolution(4IR)technologycouldgrow

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Aconfidentoutlook

Giventheratherstaticpictureoutlinedearlier,thewidelyupbeatmoodofUKmanufacturersrevealedbyoursurveyisstriking.Askedabouttheinternationalprospectsofthesectoroverthenextfiveyears,83%expressconfidence.

Overhalfofthosewhoareconfidentpointtobuoyantdomesticdemandfortheirproducts.Almostasmanycitestronginternationaldemand.Andfor43%ofthisgroup,theprospectofraisingtheirproductivitythroughnewtechnologiesisafactorintheirconfidence.

ConfidenceishighestinLondon,theMidlandsandtheNorthEast&Yorkshire,andnotablyloweroutsideEngland.Ofthosewholackconfidence,80%areworriedbythenegativeimpactofBrexit.Skillsshortagesandcostpressuresarealsofactors.

Morethanathirdofrespondentswereunawareofthegovernment’sindustrialstrategy.Afurther38%feelthatthestrategywouldeitherhavenoimpactontheirbusiness,ordoesnotgofarenough.

Alternativefutures

Theuseofautomationinglobalmanufacturinghassoaredsince2010.Improvementsinrobottechnologyhavetransformedpracticesinmanysectors,deliveringefficiencyandproductivitygains.

UKtake-uphasbeenlowerthaninmostotheradvancednations,however.Lackofskillstoimplementtheseinnovationsandsimplelackoffundstoinvestareamongthedeterrents.Andoursurveysuggests23%ofmanufacturersarestillunconvincedbythelikelyreturnoninvestmentinthesetechnologies.Yetamongthosewhohavealreadyinvested,51%reportthatthetechnologieshaveimprovedproductivity.Costreductionsandthefreeingofstafftoworkonhigher-valueactivitiesareamongtheothergainsexperienced.

ConfidenceinUKmanufacturing’sabilityto maintaininternationalcompetitivenessoverthenextfiveyears(%)

Net:confident Net:notconfident Average:83/17

SouthEast

NorthEast&Yorkshire

92 8

London

92 8

87 13

EastofEngland

88 12

Midlands

92 8

Scotland

76 24

NorthernIreland

60 40

Wales

78 22

SouthWest

86 14

NorthWest

80 20

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Thereluctanceofmanybusinessestocapitaliseontechnologyisaconcernaswestandonthethresholdofthenextgenerationoftransformation,widelydubbedtheFourthIndustrialRevolution(4IR).

OurownexperiencetellsusthatmanyoftherespondentswespoketotwoyearsagowhodeclaredtheirintentiontoinvestinthetechnologiesoftheThirdIndustrialRevolution(3IR)havenotdoneso.With4IRbuildingsoheavilyonthe3IRplatform,thislong-termlackofstructuralinvestmentpresentsakeyriskinUKmanufacturers’abilitytoembrace4IRandcompeteglobally.

IftheUK’sinvestmentin4IRtrailsbehindotheradvancedeconomies,asithasinrobotics,ourscenariomodellingforeseessignificantfinancialandeconomicpenalties.

Iflevelsofinvestmentdecrease,theUK’smanufacturerscouldexperiencea10%dropinturnover,comparedtothe‘businessasusual’scenario,withasimilar10.1%dropinGrossValueAdded(GVA)of£20.9bn.

Ontheotherhand,deeperandfasterinvestmentin4IRtechnologieswouldgenerateconsiderablegainstomanufacturersandtothewiderUKeconomy.IftheUKmanufacturingsectorcancapitaliseonthispotential,itstandstobenefitfromaboostofmorethan£100bnperannumby2026.

MikeRigbyHeadofManufacturing,TransportandLogisticsBarclays

ForwhichreasonswouldyousayyouareconfidentaboutmaintainingtheinternationalcompetitivenessofBritishmanufacturing?

Less than £1mRevenue

Domesticcustomerdemandformyproductsisstrong

Newtechnologieswillboosttheproductivityofmybusiness

Internationalcustomerdemandformyproductsisstrong

Brexitwillhaveapositiveimpactonmybusiness

Governmentsupportformyindustryisstrong

66%

29%

37%

27%

12%

£1m to £10m

52%

40%

46%

30%

19%

£10m+

56%

47%

61%

34%

25%

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From Third to Fourth Industrial RevolutionThe UK’s digital economy gives it a competitive edge – but is it ready to exploit the new technological age?

If the first industrial revolution was based on steam, the second on electricity and the third on electronics, it’s harder to define the core of the Fourth Industrial Revolution (4IR).

4IR builds on digitisation, but encompasses breakthroughs in various fields, including artificial intelligence, big data, the Internet of Things and 3D printing. Above all, it is characterised by sheer pace of change.

“The speed of current breakthroughs has no historical precedent,” the World Economic Forum’s Klaus Schwab said earlier this year.4 “When compared with previous industrial revolutions, the fourth is evolving at an exponential rather than a linear pace.”

The UK government has recognised the implications for industry and employment. Digital Minister Matt Hancock recently told the All Parliamentary Group on 4IR: “The risk is not that we adopt new technologies that destroy jobs. The risk to jobs comes from not adopting new technologies.”

The UK holds some important advantages. Its internet economy accounts for a higher proportion of its economy than any other G20 member, and is growing fast.

4 www.weforum.org/agenda/2016/01/the-fourth-industrial- revolution-what-it-means-and-how-to-respond/

Are we 4IR ready?

Automation Real-time data collection sensors

Machine learning or AI

Big data and advanced analytics

3D printing Infrastructure for self-generation of energy

Net: invested before 36% 39%55% 33%50% 43%

Net: not invested before 43% 41%24% 40%28% 34%

Not invested in this before,

but considering it 29% 25%18% 26%21% 22%

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Marchoftherobots

Automationofmachinesandprocesseshassweptthroughglobalmanufacturingsince2010.Demandforindustrialrobotshasrisenasthetechnologyhasimproved.

Theautomotivesectorwasamongthefirsttomakewidespreaduseofrobots,butothermanufacturershavesinceadoptedthemtoimproveefficiencyandproductivity.In2015globalindustrialrobotsalesroseby15%,withtheelectronics,metal,chemicalandplasticssectorsdrivingthebiggestgrowth.

UKindustryhasembracedthistrendlessenthusiasticallythanmostofitspeers.ShipmentsofrobotstotheUKin2015amountedtoaroundhalfthosetoSpainandFrance,andonly8%ofthosetoGermany.AndUKmanufacturingwasusingjust71robotsper10,000employees,comparedwith301inGermanyand531inKorea.

Barclays’2015 Future-proofing UK manufacturingreportsuggestedUKusagemightbepickingup,butthetrendwasn’tsustained.5Inthatreport,manyfirmscitedlackoffundsandlackofexternalsourcesofsupportasbarrierstoinvestment.SomecommentatorshavecitedthehighproportionofSMEsintheUKsectorasastructuralreasonforlowtechnologicalinvestment.

Arewe4IR-ready?

Companieswithexisting3IRtechnologywillbebetterplacedtoreapthebenefitsof4IR.Unfortunately,theslownessofmanyUKbusinessestoinvestin3IRmeansthattheyarealreadybehindthecurve.Asurprising40%ofsmallbusinesses(risingto70%ofmicro-businesses)inoursurveyindicatedthattheyfeltthatthetechnologycomprisingboth3IRand4IRisnotrelevant.Ofthoseplanninginvestment,levelsarelow,atanaverageofjust5–7%aboveinvestmentmadeoverthepasttwoyears.

Astep-changeininvestmentintentionisclearlyrequiredforUKmanufacturerstohaveachancetocompetewiththeirglobalpeers.

Accordingtoa2016assessmentbyPwC:“Theinvestmentrequiredtocatchupislikelytobetoocostly,andfaster-movingcompanieswillhaveasignificantadvantage…Perhapsmostimportantly,companieswhotrytojumpintoolatewillfindthattheirinternalcultureshavelaggedbehind.”6

OtherexpertshaverecentlyhighlightedtheUK’srelativelackofreadiness.

• BostonConsultingGroup(BCG)found79%ofcompaniesitsurveyedhadmadesomeprogresstowards4IR,laggingbehindChina(98%),Germany(90%)andFrance(89%)7

• KPMGunderlinedtheneedforgreatercommitmenttoR&DtoensureUKmanufacturing’sadoptionof4IR.ItpointedtotheUK’srelativelylowR&Dinvestmentatpresent–1.7%,comparedtothe2.4%averageinvestedbyOECDcountries8

• And theEEFfoundthatonly11%ofUKmanufacturersbelievedtheirsectorwasgeareduptotakeadvantageof4IR.9

5www.barclayscorporate.com/insight-and-research/industry-expertise/investment-in-automation.html

6www.pwc.com/gx/en/industries/industries-4.0/landing-page/industry-4.0-building-your-digital-enterprise-april-2016.pdf

7media-publications.bcg.com/Is-UK-Industry-Ready-for-the-Fourth-Industrial-Revolution.pdf

8assets.kpmg.com/content/dam/kpmg/uk/pdf/2017/04/rethink-manufacturing-a-uk-industrial-strategy-for-industry-4-final-report-2.pdf

9www .eef.org.uk/resources-and-knowledge/research-and-intelligence/industry-reports/the-4th-industrial-revolution-a-primer-for-manufacturers

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Adigitaladvantage

Atthesametime,theUKholdssomeimportantadvantages.Forinstance,itsinterneteconomyaccountsforahigherproportionofitsoveralleconomythananyotherG20member,andisgrowingfast.BCGpointsoutthatthisadvantagewillbeenhancediftheUKmaintainsitsleadinintroducing5Gmobilenetworks,andcontinuestoinvestintheinfrastructureandtrainingrequiredfor4IRadoption.

OurcasestudyonEnviroVent(p.20)showshowonecompanyisalreadyadoptingthistechnologytoimprovecustomerexperienceandfutureproductdevelopment.

Thethreatfromourcompetitors

WhilebroadlybullishaboutfutureUKcompetitiveness,ourrespondentsareacutelyawareofthestrongpositionofourrivals.

AskedhowtheproductivityoftheUKsectormeasuresupagainstotherinternationalmanufacturinghubs,theypositiontheUKbehindChina,Japan,SouthKorea,GermanyandTaiwan.TheyalsosensethattheUKinvestslessin4IRtechnologiesthanitsinternationalcounterparts.

Ratingproductivity

Yet,intermsofadoptionofIndustry4.0technologies,respondentsplacedtheUKasthirdmostadvanced.

Therearesomewidedisparitieswithinthis,however.Forexample,LondonbusinessesarefarmorelikelytoperceivetheUKasbeingthemostadvancedadopterof4IRtechnologies.60%ofrespondentsinthecapitalbelievethis,comparedto12%intheSouthWestandWales,andjust4%inNorthernIreland.

Industry4.0leaderboard

The five markets rated most advanced for 4IR technology adoption

Similarly,while74%ofLondonrespondentsbelievetheUKinvestsmorethanitsinternationalcounterparts,thoseinNorthernIrelandandWalesaremorelikelytoperceivetheopposite–64%and58%respectivelysaytheUKinvestsless.

AmorerealisticawarenessofthechallengesfacingUKmanufacturerswhohavenotembraced3IRastheystrivetocompetewithglobalbusinessesleadingthe4IRagendaisrequired.Thetimetoactisnow.

Respondents who believe the UK manufacturing industry is more productive than other international manufacturing hubs

Japan 36%

Germany 27%

UK 26%

China 24%

USA 21%

Mexico 48%

India 42%

USA 34%

Canada 32%

China 31%

Taiwan 30%

Germany 28%

SouthKorea 28%

Japan 25%

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Two alternative futuresWhatwouldbetheoutcomeifUKindustryweretostepupitsinvestmentin4IRtechnologiesnow?Conversely,whatifitfallsbehindintheglobalracetogainacompetitiveedgefrom4IR?

LikelyanswersareprovidedbythedevelopmentofalternativescenariosaboutthefutureofUKmanufacturing.

Scenario 1:Businessasusual

Thestarting-pointforourmodellingisabaselinescenario,foundedonofficialstatisticsaswellasmedium-termforecastsfortheUKeconomypublishedsincetheBrexitreferendum.ThisassumesthatUKmanufacturerscontinuetoinvestin4IRontheircurrentandrecentlyforecastedtrajectories.In2016manufacturersareestimatedtohaveinvestedjustover£3.3bnindigitisation.Thisisexpectedtoriseto£4.4bnby2021,andto£5.8bnby2026.

Underthis‘businessasusual’projection,theindustryisexpectedtogenerateturnoverofnearly£661bnandeconomicoutput(GVA)valuedatjustover£207bnperyearby2026.

Outputisexpectedtogrowacrossmostsectors,withvehiclesandothertransportequipmentexperiencingthestrongestgrowth.Foursectors–fuels,chemicals,pharmaceuticalsandcomputer/electronicequipment–arelikelytoseeadeclineinoutput.

Theseindustriesarealsoexpectedtoshedjobs,aswilltwofurthersectors:textileandclothing,andthewood,paperandprintingindustries.

Expectedfuturemanufacturingturnoverby2026fromacceleratedinvestmentinto4IRtechnologies(£bn)

*Notelsewhereclassified.

Enhancedinvestment BAUscenario

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Scenario 2:Reducedinvestment

Forthismorepessimisticscenario,weassumethatmanufacturers’investmentindigitisationgrowsataslowerratethaninthe‘businessasusual’case,withbusinessesdevotingalowerproportionoftheircapitalinvestmenttoit.

Thisscenarioissupportedbyourfindingsonthepersistentdeterrentstoinvestment,andbyotheranalysesoftheUKapproachtothisissue,includingtheonesmentionedonpages6and7.

Hereweprojectannualcapitalspendondigitisationof£3.92bnby2021,and£4.71bnduring2026–areductionover‘businessasusual’of£0.44bnand£1.09bnrespectively.10Overthedecade,theassumptionisthatmanufacturersspend11.8%lessondigitisationthancurrentlyexpected.

Themodellingsuggeststhiswouldleadtoatotalturnoverof10%belowthe‘businessasusual’scenario.Somesectorswouldbemoreheavilyaffected.Revenuesforrubber,plasticsandnon-metalproductswoulddropby13.2%;vehiclesandothertransportequipmentby14.9%;andothermanufacturingby15.2%.

TheoveralleffectonGrossValueAddedwouldbesimilar.Itwouldbereducedby£20.9bn,or10.1%,againstthereferencecase.Again,thesectorsmentionedabovewouldbemostheavilyaffected,alongsidethefieldofbasicmetalsandmetalproducts,whichwouldseea16.9%hittoGVAunderthisscenario.

By2026employmentwoulddeclineby6.3%over‘businessasusual’.Thatequatesto164,000directjobs.Weestimatethatafurther72,000jobswouldbelostindirectly.

Themodellingsuggeststhatreducedinvestmentwouldleadtoatotalturnoverof10%lessthantheBAUscenario.

Sectorsstandingtolosethemostjobsincludetextiles,clothingandleatherproducts,pharmaceuticals,wood,paperandprinting,andfuelmanufacture.

Theregionaleffectswouldbeuneven,too.Theareasexpectedtosufferthelargestreductionindirectjobsby2026wouldbetheNorthWest(22,000jobs),WestMidlands(21,000)andYorkshireandtheHumber(20,000).

10Figuresinallscenariosreflect2016prices.

Economicestimatesfor2026(basedon2016price)

Turnover(£bn)

GVA(£bn)

Jobs(‘000s)

Baseline EnhancedInvestmentIndicator(by2026) ReducedInvestment

2,589 2,425 2,690

£661 £595 £763

£207 £186 £239

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Scenario 3:Enhancedinvestment

Forthis,moreoptimistic,scenario,weassumefasterandmorewidespreadadoptionof4IRprocessesandtechnologiesamongagreaterproportionofUKmanufacturers.Thiswouldbeexpectedtogenerateincreasedproduction,lowercostsandbetterproductivity.

Thisscenariobuildsonthegoodawarenessandappetiteforinvestmentdisplayedbymanyrespondentstooursurvey.ItassumesthattheUKwouldexploititsadvantagesinareassuchasthedigitaleconomyand5Gnetworkdevelopment.ItalsoassumesthegovernmentwillactonitsnewindustrialstrategybyaddressingskillsgapsandsupportingR&Dinvestment.

Thescenarioassumesdigitisationinvestmentof£5.06bnperannumby2021,and£7.75bnduring2026,anincreaseovercurrentexpectationsof£0.69bnand£1.94bnrespectively.Over10years,thisamountstoanincreaseof£8.88bn,or19.5%.Weprojectthiswouldleadtoanoverallboosttoannualrevenuesof£101bn,or15.3%above‘businessasusual’.Somesectorswouldseegreaterbenefit:revenuesfortransportequipmentwouldgrowby25%,othermanufacturingby24.1%,andrubber,plasticandothernon-metallicproductsby19%.

ThetotalincreaseinannualGVAwouldalsogrowby15.3%,touching£31.6bn.Therewouldbeabove-averageincreasesinseveralsectors–ariseofover30%inbasicmetalsandmetalproducts,forinstance.

Theincreaseinemploymentovercurrentprojectionswouldbesignificant.Some101,000additionaldirectjobswouldbecreatedby2026,3.9%morethancurrentlyexpected.Afurther44,000indirectjobswouldbegeneratedacrosstheeconomy.TheregionsstandingtogainmostadditionaljobsaretheWestMidlands(14,000),NorthWest(13,000),EastMidlandsandYorkshireandtheHumber(11,000each),andtheSouthEast(10,000).

Gainsinemploymentfromwiderinvestmentintechnologyby2026acrossregions(in1,000s)

6

6

NorthEast

Scotland

8SouthWest

6

NorthernIreland

London

11

10

EastMidlands

YorkshireandtheHumber

SouthEast

14West

Midlands

13NorthWest

11

6Wales

2

8East

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Weighing up the benefitsTechnologyisalreadydeliveringgainstoUKmanufacturersofallsizesacrossthefullspectrumofsectors,ourresearchreveals.

Automationhasbeenthemostcommontechnologicalinvestmentalreadymadebyourrespondents–55%haveinstalleditatsomepoint,and45%continuetouseit.

Automationismorecommonamongbusinesseswithmoreemployeesandhigherturnover.Overafifthofrespondentswhomakecapitalinvestmentshavedevotedatleast4%oftheirspendtothistechnologyoverthepastyear.Itismostwidelyusedinaerospace,pharmaceuticals,foodanddrink,andbuildingproducts.Printingandpackagingisamongthesectorsleastlikelytohaveusedorbeconsideringautomation.

Sensorsandbigdata

Thenextmostpopularadoptionsareproduction-linesensorsthatcapturereal-timedata,followedbybigdataandadvancedanalytics.

Bigdataandadvancedanalytics

2.9%

3.7%

Automation Sensorsonproductionline

2.8%

Self-generationofenergy

2.6%

3DprintingMachinelearningsoftware

2.4% 2.1%

Currentinvestmentlevelin

Athirdofallrespondentsareusingsensors,andafurther17%haveinvestedinthempreviouslybutnolongerusethem.Theyremainpopularamongawiderangeofsectors,includingpharmaceuticals,aerospaceanddefence,chemicalsandthewoodandpaperindustry.

WeseeIoTasoneofthemainforcesdrivinginnovationandgrowthinourbusiness.Andy Makin,CEO,EnviroVent

Ofthetechnologiesassociatedwith4IR,theharnessingofbigdata–theanalysisoflargequantitiesofoperationaldatatoimproveprocesses–ismostlyconcentratedinbiggerenterprises.Afterautomation(a3IRtechnology),itclaimsthebiggestshareofspend(2.9%),with22%ofrespondentsdevoting4%ormoreoftheircapitalbudgetstoit.

Aerospaceandchemicalsfirmsagainleadhere,butthemachinemanufacture,heavyindustryandtextileandclothingsectorsarealsokeenonbigdata.

Oftherangeof4IRtechnologies,3Dprintingistheleastlikelytobeusedatpresent.Aerospaceanddefenceistheheaviestuser.

And43%ofbusinesseshaveyettoinvestinmachinelearningsoftware,alsoknownasartificialintelligence–though29%areconsideringit.GiventheproductivityandcostbenefitsthatAIcanbringtobusiness,thisisanareathatseemsespeciallyripeforinvestment.

technology(%oftotalcapitalexpenditureinthepast12months)

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Aboonforproductivity

Justoverhalfofthebusinesseswesurveyedwhichhaveinvestedin4IRtechnologyhaveseenproductivityimprovements.Thesebenefitsarespreadacrossallsizesofbusiness:theyarereportedby45%offirmsemployingfewerthan10people,andby53%ofcompanieswithover2,500employees.

Businessesinthewoodandpaperproductssectoraremostlikelytohaveseenproductivitygains,withthechemicalsandfoodanddrinkindustriesalsoreportingwidespreadbenefits.

Reducedcostsarethesecondmostcommongain.45%of4IRinvestorshaveachievedcostefficiencies,withthepharmaceuticalandfurnitureindustriesmostlikelytohavemadesavings.Again,allsizesofbusinessaregaining,thoughtherearemorebeneficiariesamonglargercompanies.

Almostathirdsay4IRtechnologiesarefreeingupstafftodomorevaluabletasks.

Yield,timeandqualityimprovements

Increasedyieldisanotherkeymotiveforintroducing4IRtechnologiesandprocesses.Ofourinvestors,69%reportedimprovementsinyieldandproductivityofthebusiness.Overhalfofthosesaidtheyhadenjoyedgainsof10%ormore.

Asignificantnumberofbusinesseshaveseen4IRimprovetheconsistencyandqualityoftheirendproducts.18%notedimprovementsof20%ormore,17%sawimprovementsofaround10%andafurther28%haveseensingle-digitpercentagegains.

Inaddition,morethanhalfof4IRinvestorshavegainedbyimprovedmanufacturecycletimes.For30%ofinvestors,timeshavebeenslashedby10%ormore.

4IRandthebottomline

Thebottomlineforbusinessis,ofcourse,whether4IRultimatelyboostsrevenueanddeliversareturnoninvestment.28%ofourinvestingrespondentsreportincreasedrevenue,and27%saytheyarealreadyseeingROI.

Aswiththeothergains,thesearespreadbetweendifferentsizesoffirm.Companieswithturnoverofunder£1m,however,aremostlikelytoreportincreasedrevenuesthrough4IR–43%haveexperiencedthis,comparedwithanaverageof28%.

Thereisawidervariationbetweensectors.Theproportionsreportingarevenueboostrangefromjust4%ofwoodandpaperproductbusinesses,tohalftherespondentsintextilesandclothing.

ThequickandconsiderableROIconvincedusthatimplementingappropriatetechnologywasano-brainerforthecompany.William Watkins, ManagingDirector,RadnorHills

BenefitsnotedbymanufacturersthathaveinvestedinIndustry4.0(byturnover)

Turnovertotal Lessthan£1m £1mto£10m £10m+

Improvedproductionlineproductivity

Freed-upstaffforhighlyskilledwork

Revenueuplift

Returnoninvestment

Reducedcosts

3%5%

51% 43% 47% 55%

45% 33% 41% 48%

32% 33% 37% 30%

28% 43% 25% 28%

27% 37% 21% 30%

6% 20%Nobenefits

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Investment plans and obstaclesUKmanufacturersmustplantoaccelerate4IRinvestmentifouroptimisticscenarioforthefutureofthesectoristoberealised.Whatdotheircurrentintentionssayabouttheprospects–andwhataretheconstraintstheyface?

Manybusinessesplantostepuptheir4IRcommitments.Thosewithinvestmentplansintendtoboosttheircommitmentby5to7%comparedtothepasttwoyears,althoughforthoseplayingcatch-upwith3IRtechnologiesthismaynotbeenough.

Automation,alreadythemostwidelyusedofthe3IRtechnologies,isinlineforthebiggestboost.Almosthalfofrespondentsaimtoincreasetheirspendonprogrammablesystemsorrobots,withathirdplanningtospendatleast10%more.

Atleastafifthofourbusinessesintendtospendatleast10%moreoneachoftheothertechnologiescoveredbyoursurvey:sensors,bigdata,machinelearning,3Dprintingandself-generationofenergy.

Scalingbackoninvestment

However,somebusinessesplantoscalebacktheirinvestments.Dependingonthetechnology,thisappliestobetween5and10%ofrespondents.

Andsignificantnumbersofbusinesseshavemadenopreviousinvestmentsanddonotplantodosoinfuture.Theproportionshererangefrom23%(automation)to33%(3Dprinting).

Averageinvestmentintechnologyplannedcomparedtopasttwoyears(%ofcapitalinvestment)

Automation

7%Sensorson

productionline

5%

Self-generationofenergy

4%

Machinelearningsoftware

4%

3Dprinting

4%Averageinvestment

intechnologyplannedcomparedtopasttwoyears

Bigdataandadvancedanalytics

4%

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Potentialforthefuture

Lookingahead,weaskedbusinessestowhatextenttherewasadditionalpotentialforincreasingtheiruseof3IRand4IRtechnologiesoverthenextfiveyears.

Atotalof78%identifyatleastsomepotentialforfurthercommitmenttoautomation.Overtwo-thirdsseemorepotentialinsensors,bigdata,energyself-generationandmachinelearning.Andjustoverhalfcanforeseemoreuseof3Dprintingoverthisperiod.

Again,significantnumbersofmanufacturersseenomedium-termroleintheirbusinessesforthesetechnologies,rangingfrom22%(automation)to39%(3Dprinting).

Persistentdoubts

Giventhebenefitsalreadybeingreportedbythosewhohaveinvestedin4IRtechnology–only6%ofthosewhohaveinvestedreportseeingnobenefits–itisperhapssurprisingthatdoubtsaboutitsvaluepersistsowidely.

Concernoverreturnoninvestmentisthemostcommonreasoncitedbyourbusinesseswhenaskedwhathaspreventedthemfrominvestingmorein4IRtechnologies.Thisiscitedby23%ofrespondents.

21%ofbusinesseslacktheconfidencethattheyhavethein-houseskillsorknowledgerequiredtouse4IRtechnologies.

21%ofbusinesseslackconfidencethattheyhavethein-houseskillsorknowledgerequiredtouse4IRtechnologies.

Constraints

Fundingissues

Financialconstraintsareprominenttoo.19%ofrespondentssaytheirbusinesslacksfundstomakelong-terminvestments,andasimilarproportionbelievetheircapitalspendingprioritieslieelsewhere.Lackofgrantsandloansfromgovernment,orfundsfrombanks,areamongotherreasonscited.

Somehaveconcernsaboutthereliabilityof4IRtechnology(17%)oritssecurity(13%).Otherssimplysaytheyneedtimetoidentifytherightsolutions,whileuncertaintyoverBrexitismentionedby14%asareasonforputtingoffinvestmentdecisions.

Concernsabouttheemployeeimpactof4IRimplementationarealsoraised.11%worrythatstaffconcernoverlosingtheirjobswouldlowermorale,whiletheprospectofmakingredundanciesputsoff8%ofrespondentsfrominvesting.

Inaddition,asignificantproportionofmanufacturersbelieve4IRtechnologyissimplynotrelevanttotheirbusinesses.

Thisisparticularlytrueofsmallerfirms,despitethefactthatahigherproportionofbusinesseswithturnoverunder£1mreportedbenefitsintermsofreturnoninvestmentandrevenueupliftwhencomparedtotheirmid-sizedandlargecounterparts.Infact,two-fifthsofsmallbusinessessaytheyconsidereachtypeoftechnologyirrelevanttotheirbusinesses.Amongmicro-enterprises,theproportionrisestoaround70%.

oninvestmentin4IRtechnology

23% 21%16%17%19%19%

14% 13% 13%

Lackofskills/knowledgewithinthe

companytousethe

technology

!

Lackoffundswithinthebusinesstomake

long-terminvestment(s)

£

Otherprioritiesforcapital

expenditure

£

Timeinvestment

neededtoidentify

appropriatesolutions

!Concernsaboutthe

reliabilityofthetechnology

Securityconcerns

regardingthetechnology

Concernsoverreturnsoninvestment

?

Lackofsupportfromgovernment

Difficultiesofobtainingloanorother

finance

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An eye on the horizonOfferinggreatersupport–infinancing,educationandimplementation–couldhelptoaccelerate4IRinvestment,accordingtomanufacturers.

Giventheconstraintsonmanufacturers,whatcanbedonetosparkactionandencouragefasteranddeeperinvestmentin4IR?Whenaskedwhatwouldhelpthemtostartinvesting,ortoinvestmore,ourrespondentspointtoarangeoffactors.

Grantsandloans

Anincreaseintheavailabilityofgovernmentgrantsandloansisthemostcommonlycitedinitiative.36%ofrespondentssaidthiswouldbehelpful.

Governmentfinancialsupportwouldbeespeciallywelcomedbythesmallestoperations.45%ofbusinesseswithfewerthan10employeeswouldjudgethishelpful,comparedtoaquarterofthebiggestenterprises.

Wideravailabilityof4IR-supportingfundsfromothersourceswouldalsobewelcomedbyasignificantnumberoffirms.

Justoveraquartercallforincreasedavailabilityofloansorotherfinancefrombanks,andasimilarnumberwouldwelcomegrantsorloansfromsourcesotherthangovernmentorfinancialinstitutions.

Moregenerally,34%agreethat“increasedavailabilityoffundswithinthebusiness”wouldenablethemtomakeorenhance4IRinvestment.Andathirdsuggestthatareductioninthecostof4IRsolutionswouldbecritical.

35%Additionalinformationaboutthebenefitsand

ROIofthesenewtechnologies

34%Extrabusiness

fundsavailableforinvestments

33%Reducingthe

costof4IRsolutions

31%Supportavailableto

helpimplementthesetechnologies

26%Moreinvestmentfundingandloans

availablefrombanks

Factorsthatcouldlead

togreaterinvestmentin4IR

technology

36%Morefundinglikegrantsandloans

availablefromthegovernment

FactorsthatcouldleadtogreaterinvestmentinIndustry4.0technology

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Ahungerforinformation

ThereisalsoevidencethatUKmanufacturersareinneedofsupportbothtofullyunderstandthepotentialbenefitsof4IRtechnologies,andtoimplementthemwithintheirbusinesses.Thistiesinwiththeearliersuggestionthatlackofskillsisasignificantbarrier.

Moreeducationisthesecondmostcommonlycitedfactortoencourageinvestment.35%ofourrespondentswouldwelcomefurtherinformationonthebenefitsandreturnoninvestmentthat4IRcanprovide.

And31%wouldbekeentohavepracticalsupporttoadopt4IR,whetherfromgovernment,manufacturersoftheequipmentorothersources.

Notably,thecallforeducationandsupportisfairlyuniformacrossbusinesssizes,suggestingthatbigenterprisesareaslikelyasmicro-firmstobenefitfromthiskindofhelp.

Evensectorsthatareamongtheleadingadoptersof4IRwouldwelcomefurtherinformationandassistance.Overhalfofpharmaceuticals,firmsandalmosthalfoffoodanddrinksbusinesses,forexample,saymoreeducationisimportant.

Morecertaintyoverpost-Brexittradewouldencourage28%ofbusinessestoconsidermore4IRinvestment.ThiswouldbeespeciallywelcomedbyfirmsinNorthernIreland(48%)andbybusinessesinsectorssuchaschemicalsandaerospace&defence(44%and41%respectively).

UKmanufacturersareinneedofsupportbothtofullyunderstandthepotentialbenefitsof4IRtechnologies,andtoimplementthemwithintheirbusinesses.

Theroleofgovernment

Thegovernment’sGreenPaper,Building Our Industrial Strategy,waspublishedinJanuary2017.Whileitdoesnotspecificallymention4IR,thepaperacknowledgesthechallengeoftheUK’sproductivitygap.

Oneofitssolutionsisinvestmentinscience,researchandinnovation;thegovernmenthaspledgedtoinvestanextra£4.7bninR&Dfundingby2020/21.AmongtheotherprioritiesareskillsdevelopmentandinfrastructureupgradeinUKmanufacturing.

WillthestrategyboostthecompetitivenessofUKmanufacturing?Mostbusinessesbelieveitwillhaveaneffectontheirbusiness–only19%believeitwillnot.

However,19%alsoexpressconcernthatwhattheyhaveheardsofaraboutthegovernment’splan“doesnotgofarenough”toaddressthechallengesfacingthesector.

Only17%areconfidentthatthegovernment’scommitmentwillensureasufficientfuturepipelineofskilledworkers.Andjust15%believeitwilladdresstheUK’scompetitivenessissues;whileasimilarnumbersaythegovernment’scommitmentprovidesUKmanufacturingwiththefinancialinvestmentitneedstosecureasuccessfulfuture.

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Strategies for successPreparingyourbusinessfor4IRisnotaneasytask,butthereareanumberofstrategiesyoucanadoptthatwillhelp.

Areyou4IR-ready?

Identifywhatstageyourbusinessisatinadopting3IRtechnologysuchasautomation.Because4IRbuildsonthe3IRplatform,lackofinvestmentnowcouldprovedetrimentalinfuture.Asthelatestindustrialrevolutiontransformsyoursector,considerwhatyour

businessmustdotoremaincompetitive.

Reachoutforhelp

ExplorethepotentialforfinancialandpracticalsupportthroughgovernmentinitiativessuchasInnovateUK,DigitalCatapultand

HighValueManufacturingCatapult.Talktoyourbankaboutfinancingatanearlystage.

Joinforces

Discussyourplanswithsupplychainpartners.Explorepossibilitiesforcollaborationandjointinvestmentintechnologies.

Emphasisethemutualbenefits.

Upskillyourworkforce

Thosewhohaveinvestedreportsignificantgainsintermsofproductivity–aswellasfreeing-upstafftoworkonhigher-value

tasks.Ensuringthatemployeeshavetheskillstoimplementnextgenerationtechnologieswillbecriticaltofuturesuccess.

Investmentintherighttechnologyandautomationprocessesisessentialtoremaincompetitive.

Case study: Radnor HillsFromitssmallbeginningsinruralWales,softdrinksupplierRadnorHillshasharnessedthepoweroftechnologytobecomeamajorplayerwiththecapacitytoproduceastaggering400millionbottlesperyear.

Thesoftdrinksindustryisanumbersgame.Twentyyearsago,RadnorHills–whichstartedlifeasamineralwatersupplier–wasusingbottlesthatweighed30grams.

Twodecadesandheavyinvestmentinthefinestbottle-blowingtechnologylater,thecompanynowmakesbottlesusing13gramsofplasticresin.Butthisisstillnotthelightestinthesector;somemanufacturershavereducedthisdowntojustninegrams.

Investmentintherighttechnologyandautomationprocessesisessentialtoremaincompetitiveinanindustrythatdependsonrawmaterials.ParticularlywhenthosematerialsareincreasinglysourcedfromEuropeandsooftenaffectedbyaweakeningpound.

Adigitalautomatedfuture

Automationhasalreadybeenincorporatedacrossanumberofbusinessprocesses,reducinghumanerrorandincreasingefficienciesinmanualprocesses.Investmentinautomatingourtankcleaningprocessremovedthehumaneffortandtimerequiredandreducedanywastecreatedbyminimisingerrors.

ThequickandconsiderableROIconvincedusthatimplementingappropriatetechnologywasano-brainerforthecompany.Itisnowonitswaytobecomingapaperlessproductionplant–withitsentirequalitycontrolsystemcentralisedononeserver.Becausewetookadvantage

oftheautomationadvancesduringthe3rdindustrialrevolutionwearenowinastrongpositiontotakeadvantageof4IRandtheopportunitiesitbrings.Westronglybelievethatthiswillbetheonlywayforustoremaincompetitiveinthefuture.

Tacklingrisingcosts

Forus–andrightacrossmanufacturing–therisingminimumwage,growingnationalinsurancecontributionsandinitiativessuchastheApprenticeshipLevyareraisingoperatingcosts.

Asaresult,maximisingtheuseoftechnologytoimproveefficienciesandfreeupemployeesformorehighlyskilledrolesisbecomingincreasinglyimportant.

Forecastingsuccess

Ourpaperlessproductionlineprovidesaccesstoaccurate,up-to-datedataatthetouchofabutton,butwearealreadyworkingtowardsasecondphasewhichwillenablethelivecollectionofdata.Itisarealitythat,onlythreeyearsago,wasbeyondourwildestdreams.

Butitistheonlywayforwardforusandforthemanufacturingindustryingeneral.

WilliamWatkinsManagingDirector,RadnorHills

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Case study: EnviroVentTheFourthIndustrialRevolution(4IR)ishere.ForUKmanufacturerslikeEnviroVent,thisrepresentsauniqueopportunitytorevampprocessesandproducts,aswellasaddingvaluetotheend-customer,believesitsCEOAndyMakin.

SmartdevicesareeverywhereinUKhomes.Notjustsmartphones,butsmartlightingsystems,fridges,printers,entertainmentsystems,hub-stylepersonalassistants,andevencars.

Assuch,moreandmoremachinesanddevicesarecontinuouslycommunicatingwitheachother–inwhatisknownastheInternetofThings(IoT).Theintegrationofthesetechnologies,andthedatatheyofferup,intobusinessandproductionprocessesrepresentsahugeopportunityformanufacturerstoleverage4IR.

Thenextlevel

AtEnviroVent,wecontinuetoinvestinnewtechnology,withanemphasisonconnectivity.WeseeIoTasoneofthemainforcesdrivinginnovationandgrowthinourbusiness.Whatthatmeansinpractice,isthatwearenolonger‘just’amanufacturerofventilationunits–andtheproductisbecomingmuchmorethanthesumofitscomponentparts.

Ournew‘myenvirovent’appgivestheconsumertotalcontroloftheirventilationsystemfromanywhereintheirhomeviatheirAppleorAndroidsmartphoneortablet.Notonlydoestheappgiveusersgreaterflexibilitytoamendtheirventilationrates,theyalsogetnotificationsaboutmaintenance–suchaswhenafilterneedschanging.

Theappisextremelyuser-friendlyandflexible,allowingtheinstallertosetuptheventilationrateswithvisibilityoftheunit’scurrentstatusatthetouchofabutton.Throughitsuse,consumerscanalsoaccessuserguidesandtechnicaldocuments,andcanprovidefeedbackandfutureproductrequeststotheEnviroVentR&Dcentre.

Thiskindoffunctionalitydeliversaddedvaluetothecustomer–whichisabsolutelykeytotakingadvantageofthechangesthat4IRisbringing.Innovationhastobefirstandforemostaboutmakinglifebetterfortheconsumer,andiftherearebusinessbenefitstothat,thensomuchthebetter.

Technologyplatforms

SuccessfullyleveragingIoTisn’tnecessarilystraightforward,though.Therearemanyaspectstoconsider,notleastwhichtechnologyplatformtouse.ThereisnopointmanufacturingadevicetoworkonIoTonlytofindthatitwon’tcommunicatewithotherdevicesbecausethetechnologyisincompatible.

It’salsoimportanttoconsiderhowmanyofyourend-userswillhaveaccesstothetechnologyrequiredtousethedevice.Therewillbesomeconsumerswhodon’thavetheknow-howtobenefitfromsmarttechnologyinyourproducts,orwhodon’twanttobetracked.Ourcustomergroupswillnotwanttoomuchcustomisationandcomplexity,ortheywillnotrecognisethevalueinit.

Forinstance,thereisalsoagrowingdemandforsuchfunctionalityamongyounger,andtech-savvy,homeowners.Thisisbeingdriveninlargepartbytheriseofsmarthomehubtechnology–whichisbecomingalifestylechoiceandevenastatussymbol.

Ournew‘myenvirovent’appgivestheconsumertotalcontroloftheirventilationsystem.

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AndyMakinCEO,EnviroVent

Thenewnormal

Regardlessofwhichcategoryaconsumerfallsinto,itisimportantforanymanufacturerlookingtoleverageIoTtoundertakecustomereducation.Onlyoncethebenefitsofasmartsolutionaretrulyunderstoodwillwidespreadadoptionhappen.Rightnow,thereisalsoatendencyforthiskindoffunctionalitytobeseenasagimmickratherthanarelevantandusefultool.

Manufacturershavearoletoplayinaddressingthatmisconception–startingwithdesigningsmartsolutionsthathavetangiblebenefitsfortheconsumer.Thatmeansaskingtoughquestionsaboutwhatyourproductdoes,howitcanbeimproved,whyIoTconnectivitywouldbeadvantageous,andwhatyoursolutionmightlooklikeinthefuture.

Thiscanseemlikeadauntingprospect,sincetherearenorightanswerstosomeofthesequestions–andno-oneisabletoaccuratelypredictthefuture.Whatiscertain,though,isthatIoTisnotgoingaway.ThismeansitistimeforBritishmanufacturerstothinkseriouslyabouthowtocombinebigdatawithIoTtoprovideenhanced,customisedofferingstoend-users,whilstgarneringbusinessbenefits.

Onlyoncethebenefitsofasmartsolutionareunderstoodwillwidespreadadoptionhappen.

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Weareconstantlylookingahead–tryingtoanticipatechangeandinvestingstrategically–toensureourtechnologycansupportforthcomingdemand.

Case study: Arlington IndustriesAsvehiclemanufacturersturntolighter,moreadvancedmaterials,strategicinvestmentishelpingsupplychainintegratorsbuildpaceandflexibilityintotheirbusinessmodels,saysGroupCEOMarkFranckel.

TenyearsagoatieronesupplierlikeArlingtoncouldsafelyinvestinarobotwiththeconfidencethatitwouldcontinuetomaketheproductinquestionforatleastthenextfiveyears.Butunprecedentedchangehasdrivenasignificantshiftinthewayweinvest.

BrexitisnaturallyaconcernfortheUKmanufacturingindustry,butultimatelytechnologicaldevelopmentpresentsthegreaterchallenge–andopportunity.

Asthispaceofchangeacceleratesatagreaterratethaneverbefore,OEMswanttofocusondesigningandsellingthebestcarsfortheircustomers–andforourplanet.Forthesupplychain,thismeansbuildingpaceandflexibilityintotheirbusiness.

Aflexiblefuture

Growingdemandforhybridandelectricvehicleshasnotonlyintroducedfurthervariabilityintermsoftheenginesrequired,butinthecombinationoftraditionalandnewmaterialsused.Thishasaknock-oneffectforothersupplychainprocessesasjoiningcompositeswillrequirebonding,ratherthantheheavydutyweldingrobotswecurrentlyuse.

Whenconsideringnewinvestments,workingtoaone-tothree-yearplanisnolongersufficient.Expensivemachinetoolsmayjustaboutdeliverapaybackoverthreeyears,butitisslippingtowardspaybackoffourorfiveyears.

Forthisreason,decision-makingwhichwouldhaveoncecentredonidentifyingthemostcost-effectivetoolingforthatjobmustconsiderhowversatileanewmachineislikelytobe.Sometimesatoolwilldeliverinbothareas,buttheperfectmachineforthejobtodaymaynotbesuitableinthefuture.Thatiswhyweareconstantlylookingahead–tryingtoanticipatechangeandinvestingstrategically–toensureourtechnologycansupportforthcomingdemand.

Ofcourse,inautomotive,thecustomerisheavilyinvolvedinthe‘tooling’,sowearenotalwaysabletomakethesedecisionsindependently.Butifwethinkthataproductislikelytochangeinthefuture,thenwemightonlyinvestinoneofthespecifiedmachinetoolsandworkitmoreintensively,ratherthaninvestinginfourthatcouldsoonbeobsolete.Thisalsoprotectsus,toanextent,fromunexpectedslowdowninaproject.

ThisimpactisnotquitesopronouncedintheGroup’sAerospacedivision.Implementingchangeintheaerospaceindustrycantakelonger,butweareseeingmorecompositesandexoticmaterialsbeingusedtomakeaircraftlighterandmorefuel-efficient.Thispresentsnewchallengesandopportunitiesfordesignandmanufactureofjigsandfixturesrequired,aswellastheflyingpartsandcuttingtoolsusedduringproduction.Butplanning,testingandinvestmentarestillgenerallymorelong-term.

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Mark Franckel Group CEO, Arlington Industries

All-in-one

The goal is, of course, getting to a stage where a single production line can cope with almost real-time variation in both volume and material.

In order to meet commercial targets, however, I think we are going to see a separation of volume and flexible sales: one flexible line, with a higher number of cells and probably more people; and one volume line, with a robotic cell and perhaps just one person. Of course, even the high volume line will use flexible tooling as much as possible.

Automating labour-intensive processes frees our employees to focus on the more complex value-added parts. This has changed the way in which we recruit; increasingly, we are looking for individuals in these higher-value positions of sophisticated assembly or engineering, while also accelerating the development and training of our existing workforce.

This works to gives our customer greater value and provides greater efficiency throughout our business. A mere 1p per part may not sound like much, but in the high-volume world of vehicles, this would offer a key efficiency for the customer and the supply chain integrator. Trying to find these win-win situations is the challenge that we face.

Automation and advanced robotics have also enabled us to increase our volume capacity. More capacity has led to winning more orders, and investment has led to us winning more complex parts. Robots can now do more manual tasks, while more complex parts are still semi-automated. With new technology and more customers we are employing more people and we have actually increased our headcount by 33% over the last three years.

Real-time data

In the UK we are now seeing greater integration between suppliers and manufacturers, which presents a great opportunity for us all.

Real-time data and communication is going to become increasingly important. Already, the frequency of shipments means that per-shift press shop analysis cannot be done on a daily or weekly basis; it must be monitored in real time.

Investing more in our IT infrastructure will also enable us to talk to the sophisticated, real-time systems of these large manufacturers and process variable orders seamlessly.

We have to prepare for a time when OEMs want the structure of a car to be the same, regardless of whether it has an electrical, hybrid or petrol engine. And we need to be agile enough to be able to receive this order data and cope with the variability.

Two steps ahead

As a management team we need to be looking to the future and anticipating change.

We need to be asking ourselves: what’s next? What’s around the corner? The introduction of more key account managers should help us to get closer to each customer and create greater collaboration on future projects.

I believe that, increasingly, the supply chain will be faced with even greater challenges. A bracket might be steel at the moment, but cars are getting lighter and we need to be prepared to find alternative materials that can cope with engine temperatures, for example.

Globally, there is an increasing demand to become more agile, flexible and efficient. The United Kingdom has always demonstrated our ability to change, to innovate and to meet global demand. And that is why it has and always will be recognised as a county of manufacturing excellence.

I see this as an exciting opportunity for us all. And one that we are ready to embrace.

Globally, there is an increasing demand to become more agile, flexible and efficient.

Automation and advanced robotics have also enabled us to increase our volume capacity.

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Key takeaways • Byenhancinginvestmentin4IRtechnologies,manufacturerscouldbenefitfromanoverallboost

toannualrevenuesof£102bn.Thiscouldliftthesectortogrowthofmorethan15%abovecurrentexpectationswithinadecade,andcreate101,000extradirectjobsand44,000indirectjobs

• Thisenhancedinvestmentcouldalsoleadtoa£31.6bnincreaseinGVA

• Manuf acturersareconfidentabouttheUK’sfuturecompetitiveness,and43%believenewtechnologieswillboostproductivity

• UKmanufacturersthathavealreadyinvestedin4IRtechnologiesarealreadyseeingthebenefits.Theseinclude:improvedproductivity(51%),reducedcosts(45%)andbetteruseofstafftime(32%)

• However,nearlyaquarterofbusinessesarestillconcernedaboutreturnoninvestmentin4IR;lackofskillsorfundstoimplementitarealsodeterrents

• Furtherinvestmentcouldbeencouragedbyincreasingtheavailabilityofgrantsandloansfor4IRthroughgovernmentandothersources,andbyenhancingeducation,trainingandsupportfor4IRimplementation.

TofindoutmoreabouthowBarclayscansupportyourbusiness,pleasecall08000154242*orvisitbarclayscorporate.com

*Callsto0800numbersarefreefromUKlandlinesandpersonalmobiles,otherwisecallchargesmayapply.Tomaintainaqualityservicewemaymonitororrecordphonecalls.

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About the authorForfurtherinformationandtofindouthowoursectorspecialistteamscansupportyourbusiness,pleasecontactMikeRigby,HeadofManufacturing,TransportandLogistics.

MikeRigbyHeadofManufacturing,TransportandLogisticsBarclays

MikeistheHeadofManufacturing,TransportandLogisticsforBarclays.SincejoiningBarclaysin2008,Mikehasalwayshadadirectfocusonthemanufacturingsector,takingtheleadforthewidermanufacturing,transportandlogisticssectorssince2012.PriortojoiningBarclays,MikewaswithHSBCfor14years,wherehecoveredanumberofrolesacrosscredit,retailandcorporatebanking.

Mikeispassionateaboutthemanufacturing,transportandlogisticssectorsandbelievestheyareessentialtotheUKmaintainingabalancedandresilienteconomy.HisvisionistomakeBarclaysthebankforcompaniesinthemanufacturing,transportandlogisticssectors.

M:07825907254*michael.rigby@barclays.com

*Pleasenote:thisisamobilephonenumberandcallswillbechargedinaccordancewithyourmobiletariff.

Theviewsexpressedinthisreportaretheviewsofthirdparties,anddonotnecessarilyreflecttheviewsofBarclaysBankPLCnorshouldtheybetakenasstatementsofpolicyorintentofBarclaysBankPLC.BarclaysBankPLCtakesnoresponsibilityfortheveracityofinformationcontainedinthird-partynarrativeandnowarrantiesorundertakingsofanykind,whetherexpressedorimplied,regardingtheaccuracyorcompletenessoftheinformationgiven.BarclaysBankPLCtakesnoliabilityfortheimpactofanydecisionsmadebasedoninformationcontainedandviewsexpressedinanythird-partyguidesorarticles.

BarclaysisatradingnameofBarclaysBankPLCanditssubsidiaries.BarclaysBankPLCisauthorisedbythePrudentialRegulationAuthorityandregulatedbytheFinancialConductAuthorityandthePrudentialRegulationAuthority(FinancialServicesRegisterNo.122702).RegisteredinEngland.Registerednumberis1026167withregisteredofficeat1ChurchillPlace,LondonE145HP.

November2017.BD06335.

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