The Future of Manufacturing in the UK

The Future of Manufacturing in the UK
What role does the UK have in the manufacturing industries of the future? China has surpassed the US in manufacturing output, and is seen by many as the factory of the world. Labour rates in China and other developing countries are so much lower than those in the UK. We can’t possibly compete. Or can we?

This question has motivated a UK government study on ‘The Future of Manufacturing’ which I have contributed to. Based on this, successive UK Governments will develop policies to shape manufacturing for the decades ahead.

One of the most important elements of future manufacturing strategies is to embrace the idea that manufacturing is much more than simply making things. Manufacturing know-how extends from research and development, to design and production, through to maintenance, repair, recycling and re-use. Basic production may be a very small part of that whole cycle, in terms of revenue, jobs, and competitive importance. The need for this broad concept of manufacturing is clear if we consider that, for many types of capital equipment e.g. railway rolling stock or machine tools, the original purchase of the item is only a tiny part of the total expenditure over its lifetime in use. And in more and more cases, customers don’t want the trouble of owning equipment, but would rather just pay to be able to use it. This type of idea is also catching on in consumer goods, too, with the increasing popularity of car-sharing and other forms of so-called ‘collaborative consumption’. Manufacturing firms need to learn to develop new business models that make use of their technological know-how to make these new types of arrangements work – and work profitably.

Technology is critically important, too. Production technology, underpinned and linked together by IT, will be much more responsive and flexible, meaning that products can be personalised and customised in ways that we cannot currently imagine. ‘Intelligent’ and ‘incomplete’ products will be able to adapt and evolve as the circumstances of their use dictate. Changing technologies will also mean that the organisation of manufacturing will change fundamentally – something which is already happening, as designs produced in one continent can be made in another almost instantaneously. This will mean that the full cycle of manufacturing will take place in networks of smaller firms interacting intensively with each other and with customers, rather than in the classic large manufacturing firm that mass produces products and then simply ships them from the loading bay.

Emerging economies are not only competitors – they are also new markets. UK manufacturing must continue to develop the capabilities required to engage effectively with customers in these economies. At the same time, global dispersion of manufacturing activities raises concerns about sustainability to a new level. Customers – consumers, businesses and governments – will be increasingly concerned about the environmental and social sustainability of products and the processes and supply chains that deliver them. Building cycles of re-use, re-manufacturing and repair into manufacturing will become a central rather than a marginal concern for manufacturers across many sectors. Being good at developing the systems to ensure sustainability will be a competitive advantage in its own right, as these values become as important to customers as the value derived from basic product functions.

What is needed then, is a manufacturing sector that is competitively successful on factors other than production cost. It will offer value to customers through deep, rich interaction to help solve their problems, and by using technology to create value in ways that are as yet unimagined. It will embrace and make a virtue of working in a world where the production and ownership of material artefacts is increasingly problematic, by shifting to service-intensive business models in a circular economy, rather than production-intensive business models in a linear, factory-to-landfill economy. This in turn will require new approaches to management that can build these business models across multiple organisations, new ways of valuing assets and resources to reflect concerns such as sustainability, as well as leading-edge application of material, product and information technologies. Some firms are already adopting parts of these models, but there is a long way to go. Bold experiments are needed to establish prototypes for this new form of manufacturing, and universities have an important role in shaping these inter-organisational, inter-disciplinary explorations of the shape of things to come.

About the Author: Martin Spring is a Professor at Lancaster University Management School. His research has contributed to and shaped three prominent themes in Operations Management over the past twenty years: business service operations and business models, supply chain management, and operations strategy.

Expand for more