Why manufacturing is a vital weapon in the battle to ‘level up’

If the UK government is to deliver on its much-stated goal of tackling regional economic inequality, it must focus more on manufacturing.

For some years now, British political discourse has been peppered with mentions of ‘levelling up’. Used to describe plans to tackle regional economic inequality, it was one of prime minister Boris Johnson’s most-used terms of the 2019 election campaign, according to the BBC. More recently, the results of the local elections in England have reinforced the government’s plans with a raft of new legislation to supercharge its agenda being unveiled in the Queen’s speech.

All of this coming on the back of chancellor Rishi Sunak’s March 2021 Budget, in which he announced that applications are now being sought for the government’s £4.8 billion Levelling Up Fund, aimed at boosting infrastructure investments such as improvements to town centres and local transport.

This focus is both timely and much needed. According to a recent report from the Institute for Fiscal Studies [PDF], the UK is one of the most geographically unequal nations in the developed world. “Compared with 26 other developed countries, it ranks near the top of the league table on most measures of regional economic inequality. There are also substantial differences in earnings, wealth, health, educational attainment and social mobility across the country,” say its authors.

UK manufacturing has a huge part to play in addressing these disparities. For a start, it’s a lynchpin of many local economies, not to mention the fact that it accounts for around 9 per cent of gross domestic product. That’s a proportion that should and could be much larger, in my opinion and the opinion of manufacturers I speak to every day.

That said, there are a few considerations to take into account. For a start, it’s no secret that UK manufacturers are crying out for skills – and since this is a sector that can demonstrably lead to greater local economic regeneration and growth, it’s vital we provide people of working age with the new skills and capabilities they need to compete for and succeed in local manufacturing jobs.

After all, we often talk about how smart manufacturing and Industry 4.0 technologies are a way to upgrade regional manufacturing via an injection of innovation that boosts productivity while cutting costs. But without a skills upgrade for existing workers and new workforce entrants, how can new technologies deliver on their promise?

Last year’s Level Up Industry report from the Manufacturing Commission, led by Lord Karan Bilmoria, makes this point clearly and forcefully. “Skills were raised as an important point in all of our roundtables, with manufacturers stressing their inability to access both the quantity and quality needed, as local providers were unable to keep up with their demand,” it says. “Supply and demand in job opportunities and skills provision is currently mismatched. In order for local job opportunities to be more available to local people, all regions should have a process to match learner aspiration to business needs.”

Another consideration is where in the country these efforts might be most usefully focused. It’s clear that the fastest gains are perhaps to be made in areas that already demonstrate a clear track record in particular areas of manufacturing: aerospace in Bristol and the West Country, for example, and transportation in Derby and the surrounding area.

At the same time, we also need to be looking to the future and at emerging areas of manufacturing opportunity in less traditional verticals such as renewable energy, electric vehicles and pharmaceuticals, to name a few. These emerging and hyper-growth industries not only create opportunities at the plants, but also create new supply chains generating far greater and wider economic impacts in the local economies. Here, there’s little time to waste in the UK, since other regions of the world are also looking to build their own world-beating capabilities in these new sectors.

There’s a lot to be said here for greater collaboration between manufacturers, government and universities on initiatives that build centres of excellence closer to the areas where they are most needed.

Take, for example, the University of Sheffield Advanced Manufacturing Research Centre. This was established in 2001, as a £15 million collaboration between the university and aerospace giant Boeing, with support from Yorkshire Forward and the European Regional Development Fund. Today, the AMRC enjoys a global reputation for its work in helping companies of all sizes overcome manufacturing challenges, employs over 500 highly skilled researchers and engineers, and is a model for collaborative research involving universities, academics and industry worldwide. Needless to say, its impact on its local area in South Yorkshire has been seismic.

All this will call for new technologies and skills in abundance. You simply can’t use old approaches and old technologies to build entirely new products. The companies that score the biggest successes here will be those companies that can absolutely master productivity and build these products faster, more cost-effectively and with minimal environmental impact. That means that, for established manufacturers, digital transformation isn’t optional. It’s a prerequisite to entering and conquering new markets. For brand-new entrants, meanwhile, smart manufacturing will be a given from Day One of operations.

By 2025, the much talked about fourth industrial revolution is expected to create up to £2.7 trillion of incremental value for manufacturers worldwide, according to a report from the World Economic Forum [PDF]. If the UK’s regions are to grab their own slice of this predicted prosperity, the work of helping their manufacturers to embrace new technologies and channel them in the right directions simply cannot start soon enough.

Clearly, there’s a huge amount of work still to do. Britain may be the birthplace of the Industrial Revolution, but the time for resting on its laurels has long since passed. As our manufacturing sector gears up for this fourth industrial revolution, all the creativity, expertise and innovation that resides right across its regions must be fully and urgently deployed, for the benefit of our nation as a whole.