UK manufacturing not utilising digitisation enough, compared to global competitors
According to a new analysis from PwC’s Strategy&, UK manufacturers are needing to apply more technologies to their operations to keep up with global competitors.
The report, dubbed “Digital Champions: How industry leaders build integrated operations ecosystems to deliver end-to-end customer solutions”, suggests that manufacturers in the UK are currently demonstrating a sound level of digital ecosystem maturity and technology adoption.
However, only 1% of UK companies have qualified as “digital champsions”, compared to 19% of Asian firms, and 11% of American manufacturers.
In the UK, manufacturers expect an average of 10.8% revenue boost and 9.3% in cost efficiencies over the next five years.
32% of UK firms stated their employees have the required qualifications for a digital future compared to just 23% of EMEA manufacturers.
35% of UK manufacturers are focusing on providing a digital customer experience throughout the customer journey, compared to only 30% of EMEA firms.
“While the UK's Industrial Strategy reinforces the huge potential technology can offer, making radical shifts across the manufacturing process or supply chain is neither quick nor easy to implement,” commented Darren Jukes, UK Industrial Manufacturing and Services Leader and Industry 4.0 Champion at PwC.
“As this report shows, there is also a risk that if UK companies don't pick up the pace, they could find themselves outmaneuvered by digital champions in other territories.”
“Employees are a crucial cog in this digital evolution - they enable and support the efforts of a company’s strategic direction, solutions, performance and operations.”
“As they navigate this transformational road ahead, firms must not only assess the status quo of their workforce - advancing the best and brightest and most digitally-oriented existing talent while training others to match these skills - but inject new talent into the organization where gaps in people’s skill sets and capabilities are revealed.”
IMF: Variants Can Still Hurt Manufacturing Recovery
After a year of on-and-off manufacturing in the US, UK, and the eurozone, demand for goods surged early last week. Factories set growth records in April and May, suppliers started to recover, and US crude hit its highest price point since pre-COVID. As vaccination efforts immunise much of the US and UK populations, manufacturers are now able to fully ramp up their supply chains. In fact, GDP growth could approach double-digits by 2022.
Now, the ISM productivity measure has surpassed the 50-point mark that separates industry expansion from contraction. Since U.S. president Biden passed his US$1.9tn stimulus package and the UK purchasing managers index (PMI) increased to 65.6, both sides of the Atlantic are facing a much-welcomed manufacturing recovery.
Lingering Concerns Over COVID
Even as Spain, France, Italy, and Germany race to catch up, and mining companies pushed the FTSE 100 index of list shares to a monthly high of 7,129, some say that UK and US markets still suffer from a lack of confidence in raw material supplies. Yes, the Dow Jones has made up its 19,173-point crash of March 2020, and MSCI’s global stock index is at an all-time high.
Yet manufacturers around the world realise that these wins will be short-lived until pandemic supply chain bottlenecks are solved. If we keep the status quo, consumers will pay the price. In April, inflation in Germany reached 2.4%, and across the EU’s 19 member countries, overall prices have increased at an unusual pace. Some ask: Is this true recovery?
IMF: Current Boom Could Falter
Even as Elon Musk tweeted about chip shortages forcing Tesla to raise its prices, UK mining demand skyrocketed; housing markets lifted; and the pound sterling gained value. The International Monetary Fund (IMF), however, cautioned that manufacturing recovery won’t last long if COVID mutates into forms our vaccinations can’t touch. Kristalina Georgieva, Washington’s IMF director, noted that fewer than 1% of African citizens have been vaccinated: “Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery”.
Across the globe, manufacturing companies are keeping a watchful eye on new developments in the spread of COVID. Though US FDA officials don’t think we’ll have to “start at square one” with new vaccines, the March 2021 World Economic Outlook states that “high uncertainty” surrounds the projected 6% global growth. Continued manufacturing success will in large part depend on “the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions”.
Mathias Cormann, secretary-general of the Organisation for Economic Co-Operation and Development (OECD) concurred—without global immunisation, the estimated economic boom expected by 2025 could go kaput. “We need to...pursue an all-out effort to reach the entire world population”, Australia’s finance minister added. US$50bn to end COVID across the world, they imply, is a small investment to restart our economies.