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The Power of Manufacturing

Industry’s next revolution will be powered by high technology

Pioneering businesses are building on the glorious past of British manufacturing to forge a successful future

7 November 2015

9:00 AM

7 November 2015

9:00 AM

Manufacturing made Britain great. Its wealth built our great cities and whole towns sprang up on the back of our industrial heritage. Great British engineers like Stephenson and Brunel powered the industrial revolution and created a nation of makers and doers.

The nature of manufacturing has changed, but it still matters to Britain. It matters to the families of the 2.6 million hard-working people it employs and the countless small businesses that make up its supply chains. It matters to our export performance and to the people looking for apprenticeships that will lead them to highly skilled, well-paid jobs. Most importantly, it matters to the thriving local communities it sustains.

I am proud of our manufacturing heritage. It has been at the heart of our economic development for well over a century and its impact on communities across the nation cannot be underestimated. The towns built to support the factories and mills of the industrial revolution provided people not only with a living, but with a sense of community too. And we can celebrate this rich history while looking confidently towards the future. The UK remains one of the world’s leading manufacturing nations, producing more manufactured goods than we did 30 years ago. Every 2.5 seconds, an aircraft powered by a Rolls-Royce engine takes off or lands, and every 20 seconds a new vehicle rolls off a British production line. Manufacturing contributes more than £170 billion to the economy — an extraordinary figure — and most impressively of all, it punches above its weight in boosting productivity, driving innovation and supporting the exports that will bring real rises in income for families. Productivity in manufacturing has increased more than three times faster than the UK economy as a whole over the past 10 years. It accounts for almost three-quarters of business investment in R&D and just over half of all UK exports.

But we cannot rest on our laurels. As the world of manufacturing changes, we must change too. I want the future to be just as successful as the past. Building on our success in innovation, I want Britain at the forefront of the more hi-tech, higher-skilled manufacturing that is the key to future success. Game-changing digital technologies will revolutionise the way things are made, yielding significant productivity gains, enabling the mass customisation of products, and transforming global supply chains. These technologies include such concepts as ‘big data’ and the ‘internet of things’, new raw materials and innovative, flexible manufacturing processes such as automation, robotics and 3D printing. Their convergence is widely seen as heralding a fourth industrial revolution. This next phase of globalisation offers the chance to reboot manufacturing here at home.

By building on our reputation for manufacturing quality, service and innovation, and maximising our competitiveness, we can be at the forefront of this smart revolution. The foundations are strong. The vehicle production sector has been transformed by great success stories like Jaguar Land Rover in Coventry and Nissan in Sunderland. Thanks to companies like these we now have the most productive car industry in Europe. Car production is rising, and UK content is rising as global parts suppliers take advantage of a £6 billion ‘reshoring’ opportunity identified by the Automotive Council.

Manufacturers want to invest and make things in the UK because we are getting the fundamentals of the economy right. We are playing to our strengths as an outward-looking, trading economy and we are creating an unashamedly pro-business environment.

We are taking unprecedented steps to back business as set out in our productivity plan, including cutting corporation tax to 18 per cent by 2020, slashing a further £10 billion of red tape and investing £6.9 billion in the UK’s research infrastructure up to 2021. As part of our industrial approach, we are working closely with manufacturing companies to understand their needs and remove barriers from their path. The High Value Manufacturing Catapult initiative shows how companies can adapt to new technologies and reduce their costs.

We are also championing small manufacturers, providing expert advice and practical support through the Business Growth Service to help them improve, enter new markets and transform into high-growth mid-sized companies with strong productivity and export success. And our plans to devolve powers and budgets will help regions to capitalise on their strengths and build successful manufacturing clusters. They are the bedrock of the Northern Powerhouse and the Midlands Engine.

But of course there are challenges, too, and the government is not simply standing aside. The UK steel industry in particular is facing a hugely difficult time. The excess capacity in global steel last year was more than 570 million tonnes, almost 50 times the UK’s annual production, and the price of steel slab has halved in the past year. So we will add to the £50 million compensation we’ve paid out for high energy costs, help UK steel makers to win more big contracts and continue to raise unfair trading issues.

Britain has always been a great manufacturing nation and we always will be. The shifting dynamics of global manufacturing are creating an opportunity for a new generation of goods and products to be ‘Made in the UK’. Consumers want to embrace that brand and concept, and by building on our history of innovation and manufacturing excellence will again be proud to say: ‘This is made in the United Kingdom.’

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