Increased investment in technology a key part of boosting manufacturing productivity

Increased investment in technology a key part of boosting manufacturing productivity

The last year has been a challenging one for manufacturing, and 2016 is likely to continue along the same vein. Risks – from exchange rate volatility, to a slowdown in a major market – loom large on manufacturers’ radar this year. 

But facing down economic headwinds is nothing new for the manufacturing sector. Manufacturers are responding to this by seeking out opportunities to ensure their businesses are as competitive as possible. As ever, productivity is a key focus: our recent Executive Survey showed that a balance of 41% of manufacturers are planning for an increase in their productivity in the year ahead. 

And while productivity may have risen up the political agenda of late, it has always been a focus for manufacturers. This is clear in official statistics which show that in the decade running up to the recession, average annual productivity growth in manufacturing was nearly double the rate for the whole economy. 

Manufacturing has tended to perform better than the whole economy for a number of reasons:

- A highly skilled workforce: 22% of manufacturers offer higher apprenticeships and 64% have recruited a graduate in the past 3 years

- Higher investment: Between 1998 and 2014, manufacturing invested on average 16% of its GVA compared with 11% for whole economy and 9% for services.

- More R&D: The sector accounts for two thirds of business expenditure on R&D in the UK.

That said, there are plenty of ways for even manufacturing to become leaner and more efficient. In particular, new technologies offer massive opportunities, both for streamlining processes but also for innovation and change, which could deliver something of a step-change in industrial productivity. 

These technologies include big data; advanced analytics; improved human-machine interfaces; and additive manufacturing. These technologies combined offer far-reaching opportunities throughout manufacturing and its supply chain. 

The manufacturing sector has always had to adapt to shifting landscapes. Developing, responding to, and taking up new technologies will be no different in this respect. However, that doesn’t mean it will be easy. There are a number of challenges ranging from skills, security and the need for large scale capital investment to name just a few. 

So, how can manufacturers reap the highest returns from new technology? It’s set to be a hot topic of discussion at this year’s National Manufacturing Conference

Felicity Burch is a Senior Economist with EEF, the manufacturers’ organisation.