Make UK: UK manufacturing to see a sharp boost in investment
Offering 130 per cent first-year relief on qualifying main rate plant and machinery investments between April 1, 2021 and March 31, 2023, latest findings from a Make UK survey identified that the 'super-deduction' tax incentive is expected to provide a sharp boost to investment for manufacturers in 2021.
“The Budget has made a clear impact on manufacturers in terms of confidence and they are stepping up their plans to invest in response. For too long the UK’s investment performance has been below par and the incentive should provide a boost in the short-term at least,” commented Verity Davidge, Director of Policy at Make UK.
Whilst a positive message, Make UK does stress the need for a long-term broad industrial strategy that puts manufacturing at the centre of pandemic recovery plans, which it believes should include a partnership between the government, industry and the UK science base to boost the UK’s innovation and investment performance.
“One swallow doesn’t make a summer and, with the economy at a crossroads, there remains an urgent need to consider how we make a structural change to permanently increase investment for the long term. This must be done in the round of an industrial strategy that looks beyond the horizon, plays to the UK’s undoubted strengths in science and innovation and seeks to truly ‘build back better’,” added Davidge.
Make UK key survey findings of 149 companies
- 22.6 per cent of companies plan to increase their investment as a direct response to the tax incentive, with 28.1 per cent planning to bringing forward investments plans in response
- 48.6 per cent said there would be no changes to their plans or that their plans were too rigid to change
- 32.4 per cent see the Budget as a measure that has the biggest impact, followed by the furlough scheme (23.2 per cent) and boost to research and development (21.2 per cent)
- 19.6 per cent of manufacturers see the Budget as a boost in confidence, with only 3.4 per cent viewing it negatively
- 55.3 per cent of manufacturers believe the planned increase in Corporation Tax will have no impact on their overseas or company investment plans, however 28.4 percent believe it will deter foreign investment, with 16.4 per cent believing it will have a negative impact on their company
- 46.9 per cent state that sales and orders have improved since the start of the year, with 15.6 per cent commenting that they had worsened
- Despite improvements, 28.1 per cent believe that returning to normal trading is more than a year away, 26 per cent state that it will take between six and 12 months
- 10 per cent of companies report that they have up to a quarter of staff furloughed, with 44.6 per cent reporting that they have up to 10 per cent
Gartner: Leaders Lack Skilled Smart Manufacturing Workers
With organisations rapidly adopting industry 4.0 capabilities to increase productivity, efficiency, transparency, and quality as well as reduce cost, manufacturers “are under pressure to bring their workforce into the 21st century,” says Gartner.
While more connected factory workers are leveraging digital tools and data management techniques to improve decision accuracy, increase knowledge and lessen variability, 57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support their smart manufacturing digitalisation plans.
“Our survey revealed that manufacturers are currently going through a difficult phase in their digitisation journey toward smart manufacturing,” said Simon Jacobson, Vice President analyst, Gartner Supply Chain practice.
“They accept that changing from a break-fix mentality and culture to a data-driven workforce is a must. However, intuition, efficiency and engagement cannot be sacrificed. New workers might be tech-savvy but lack access to best practices and know-how — and tenured workers might have the knowledge, but not the digital skills. A truly connected factory worker in a smart manufacturing environment needs both.”
Surveying 439 respondents from North America, Western Europe and APAC, Gartner found that “organisational complexity, integration and process reengineering are the most prevalent challenges for executing smart manufacturing initiatives.” Combined they represent “the largest change management obstacle [for manufacturers],” adds Gartner.
“It’s interesting to see that leadership commitment is frequently cited as not being a challenge. Across all respondents, 83% agree that their leadership understands and accepts the need to invest in smart manufacturing. However, it does not reflect whether or not the majority of leaders understand the magnitude of change in front of them – regarding technology, as well as talent,” added Jacobson.
Technology and People
While the value and opportunities smart manufacturing can provide an organisation is being recognised, introducing technology alone isn’t enough. Gartner emphasises the importance of evolving factory workers alongside the technology, ensuring that they are on board in order for the change to be successful.
“The most immediate action is for organisations to realize that this is more than digitisation. It requires synchronising activities for capability building, capability enablement and empowering people. Taking a ‘how to improve a day in the life’ approach will increase engagement, continuous learning and ultimately foster a pull-based approach that will attract tenured workers. They are the best points of contact to identify the best starting points for automation and the required data and digital tools for better decision-making,” said Jacobson.
Long term, “it is important to establish a data-driven culture in manufacturing operations that is rooted in governance and training - without stifling employee creativity and ingenuity,” concluded Gartner.