Manufacturers must invest now to earn their place in “Industry 4.0”

As we enter 2014, the manufacturing sector looks set for the first strong year-end since the recession.

The sector reached a two year high for growth in August, and following the news from data firm Markit and the CIPS that manufacturing was a major boost to the UK’s economy in October, the outlook for 2014 is very optimistic. However, that optimism should be tempered with caution.

Competing with the Far East on cost and volume remains impossible, so for last quarter’s new shoots of growth to turn into something truly sustainable, it is vital for UK manufacturers to invest in new technology and embrace new ways of working. Agile, flexible business processes and a focus on customisable, bespoke manufacturing have emerged as important elements of a new approach that has been dubbed Industry 4.0.

The phrase was first coined two years ago at the Hanover Fair, the world’s biggest industrial fair, and defines this new phase in manufacturing as the fourth major industrial revolution, following steam, electricity and the more recent entry into the digital age. While this might seem like a grand comparison, it is certainly justified.  Successfully embracing Industry 4.0 will enable the UK to regain its spot as a major manufacturing power.

However, achieving this new model is not without its challenges, starting with the level of investment required by companies. This is about much more than simply buying and installing the latest equipment, instead requiring a deep investment into integrating new business processes that affect the entire organisation.

The good news here is that we have seen significant proof of manufacturers rising to the challenge. Earlier this year for example we saw £1bn invested into technology and skills for the UK automotive industry, co-funded by the government and manufacturing companies. Likewise, the manufacturers’ association EEF and accountancy firm BDO LLP recently revealed a surge in investment from UK companies, with 24 per cent stating an intention to increase their investment levels – up from just seven per cent from the same poll in May. The result was the highest surge in investment since 2007 and the second highest since the survey began in the 1990s.

A more difficult challenge to address is ensuring that companies have the skilled workers and leadership capable of taking on these new ways of working. As part of a recent round of talks with spokespeople from around the industry, Epicor asked whether the increasing level of automation and ‘intelligence’ in production and business processes in manufacturing would result in IT skills becoming more important.

The response was an unanimous yes, but when we asked if this meant traditional technical skills would become less important, we received a firm no, with many respondents wary of becoming over-reliant on automation and losing the skills to understand and fix problems.

The manufacturing sector has an unfortunate reputation for being slow to embrace change and eager to cling on to traditional methods. If the industry is to remain relevant on the global stage against increasingly sophisticated operations in the Far East, UK manufacturers must prepare themselves for the new strategies required to earn the Industry 4.0 standard.

Steve Winder, Vice President, UK & Eire, Epicor

The Future of Manufacturing – Sheffield Forgemasters’ Apprentices

Despite tough economic conditions our client Sheffield Forgemasters continues to invest in developing young talent for the future, with a strong Apprenticeship programme. I’ve had the pleasure of training and working with some of these young people and their colleagues across the business over the last few years and it’s great to see them making a difference – and having some fun along the way! Well done folks!

http://www.youtube.com/watch?v=VDpmH9fif38#!

Recruiting for the Future of Manufacturing

The UK’s manufacturing sector has had cause for celebration recently after the revelation that UK MANUFACTURING output has increased at the fastest pace in almost two decades.[1]  While the country still has a way to go to reach pre-recession levels, the surge in output is a welcome surprise that shows the sector is finally heading in the right direction.

Continued growth is closely tied with the success of the rest of the UK’s economy, and the current boom comes at the same time as the fastest growth in retail sales for several years, as well as an encouraging lift in car sales.

That said, there is much manufacturers can be doing to make sure they are able to sustain this growth over the next few years. Among the most important factors is ensuring a steady stream of fresh talent, especially as the sector itself continues to evolve and demand a more diverse range of skills and talents.

There is much talk of a skills gap hitting the UK’s manufacturing sector in the next few years, but in fact it seems we may already be there. According to the Higher Education Statistics Agency (HESA), more than a quarter of engineering and technology graduates are not currently employed in the sector. With around 50,000 higher education qualifications awarded in the sector per year, this represents a startlingly large amount of potential new manufacturing recruits that either can’t find work in the sector, or have decided to take their qualifications elsewhere. Eight per cent are unemployed.

At the same time, a report by the Social Market Foundation found that due to the UK’s aging workforce, around 100,000 jobs will arise every year that require degrees in science, technology, engineering and maths (STEM). If this remains unchanged, the think-tank believes the UK will require 40,000 more graduates every year until the year 2020 – almost half as much again of the amount the country is currently producing.

This lack of STEM graduates is set to have an impact on a wide variety of sectors, but the manufacturing industry will be especially hard hit as it continues to evolve and technology plays an ever greater role. Within the factory a growing focus on automation presents a clear need for more skilled IT workers, and globalisation is also bringing greater demands as technology plays a vital role in keeping everything connected.

While STEM graduates are clearly fundamental for the future of manufacturing, the industry must not overlook the need for entry level workers. One of the sector’s greatest strengths is that it has always been possible for an entry level employee to gain new skills and work their way up the chain to an experienced, senior position. Likewise, with non-traditional skills like communication becoming more important, there are even more opportunities for people outside of traditional engineering and technology backgrounds. Around a million young people in the UK are still classified as NEET (not in education, employment or training). The manufacturing industry should be doing everything possible to engage this major potential workforce, particularly at such a crucial time of economic instability and severe domestic unemployment.

With so many engineering and technology graduates not finding work in their field, more needs to be done to promote just what an exciting and fast-paced opportunity a career in manufacturing represents. By making it clear that the industry fosters innovation and offers a great deal of opportunity for advancement, manufacturers can not only attract newly qualified graduates, but inspire a whole new generation of young people to study STEM topics, provide the workforce boost that the UK will so desperately needs, and secure the next generation of UK manufacturing’s future leaders.

Stephen Winder
RVP Manufacturing UK