The Annual Manufacturing Report 2018, published this week by Hennik Research, says UK manufacturers are poised to take on the world, but are failing to pull the trigger on a bright future because of uncertainties surrounding the outcome of Brexit negotiations and the threatened shortage of skilled workers in the coming decade.

The report’s author, The Manufacturer’s editorial director, Nick Peters, said, “UK manufacturing has come a long way in recent years, as we have seen from their stellar performance in 2017. They have bought the argument that only those companies that adopt the very latest Fourth Industrial Revolution digital technologies, known as Industry 4.0, can compete on the world stage, and they have faith in their own drive, determination and innovation to succeed. But these external factors pose a serious threat.”

The AMR reinforces the concerns expressed in the sector’s response to the government’s industrial strategy green paper that UK manufacturers needed to accelerate adoption of Industry 4.0 in order to be competitive with countries where adoption rates are much higher.

“It isn’t that manufacturers don’t trust the extraordinary power and potential of these technologies – they manifestly do,” Peters said, “but they are following a familiar narrative established over previous decades and successive governments. They hesitate because they sense a lack of national economic purpose from the centre. Hopefully the government’s anticipated new industrial strategy will resolve that. What will be much more difficult to deal with is the scarcity of skilled recruits, now and in the future, and the extreme uncertainty caused by Brexit.”

Some of the key statistics:

72 per cent of manufacturers have confidence in overseas trade and say conditions are good for growth, and yet… 67 per cent say Brexit is making planning difficult and is damaging business prospects.

71 per cent believe apprenticeships are developing into a proper alternative to higher education for school leavers, but a significant number believe the government’s new Apprenticeship Levy, designed to recruit three million more apprentices in the coming years, has backfired badly… 59 per cent say it is little more than a tax on employment.

87 per cent say they are ready to invest in productivity-enhancing digital technologies, while… 61 per cent say they can self-finance the investment or raise the money from lenders.

“The last statistic on the readiness of manufacturers to invest is, on the face of it, quite hopeful,” Peters added, “but our survey did not just measure intentions, it also measured how strongly manufacturers feel about these issues. We are concerned that behind these seemingly positive numbers lies a great deal of hesitancy.”

The sponsor of the Smart Factory section of the report is digital technologies solutions provider Columbus. Managing director, Mary Hunter, writes in her introduction to the section, “It is encouraging to see such a positive response to embracing the potential of smart factories reflected in this AMR survey. But technology alone won’t drive efficiency and competitiveness. Digital transformation is a journey that organisations must take organically and it involves more than just the adoption of shiny new technologies. Digital maturity requires the involvement of all the stakeholders in a manufacturing business including governance and leadership, people, operations, customers, data and analytics.”

Cara Haffey, PwC UK’s industrial manufacturing & automotive leader, commented on the PwC-sponsored Skills and Training section: “The UK manufacturing industry is experiencing a radical transformation triggered by the opportunities presented by the acceleration of the fourth industrial revolution. This is having a real impact on the skills manufacturers feel they need for the future – ranging from artificial through to emotional intelligence.

“The Manufacturer’s research findings also suggest the need for a regionally oriented action agenda, with a focus extending beyond simply skills to manufacturing industry’s wider needs.”

The full report is available for download here.