UK Manufacturing - Supply Chains Need Strengthening

The need for supply chains supporting UK manufacturing to be significantly strengthened has been highlighted by a new research report from the CBI and consultants AT Kearney.

According to the report, almost 80 per cent of companies say improving the quality of Britain's supply chain will be crucial to future growth. The report estimates that greater use of UK firms in manufacturing supply chains could add up to £30bn to GDP and create hundreds of thousands of new jobs in manufacturing.

So, what is holding UK manufacturers back from doing that:

The CBI / AT Kearney research suggests the following factors:

(1) Under-investment in research and development (R&D)

It is suggested that the UK is falling behind international competitors in terms of investment in R&D. The report concludes that:

"We must raise the level of our R&D investment to at least match that of our rivals, and focus more attention on commercialisation of our ideas so that we can derive the returns we should from our world-class research base"

(2) A growing skills crisis, particularly in high-value manufacturing

The research points an accusing finger at the UK education system indicating that it is not currently capable of supplying the right number of trained people with the required skills:

"the high value manufacturing we are looking to encourage requires more specialised skills than our education and training system is currently able to provide"

(3) The need for a more flexible, dynamic external business environment

This point is more about the nature of doing business in the UK, suggesting that UK competitiveness is being held back by factors such as red-tape

(4) Restoring the strength of the neglected "foundation industries"

These industries include chemicals, steel and plastics - all of which suffered significantly during the global economic downturn and have struggled to recover. The report suggests that they are critical to support the high value manufacturing activities that rely on the output of foundation industries.

(5) The need to take a longer-term view on investing in manufacturing

In what is perhaps a dig at the often-criticised short-termist approach to investment in the UK, the report concludes that:

"Our manufacturing firms are not investing as much in critical technological and process improvements, such as automation and robotics, as their counterparts in other countries."

and finally,

(6) The public sector needs to support UK manufacturing by increasing how much it sources from UK firms

In a hint that UK manufacturing often lacks price competitiveness, the CBI urges the public sector to consider value, not cost!

The CBI / AT Kearney report is packed with useful data and case studies on UK manufacturing - well worth a browse for an hour or so.