UK industry risks falling behind on AI and automation as competitors steal a march
Britain’s manufacturing sector is warning the UK risks falling behind its international rivals in the race to embrace cutting edge technologies such as AI and other game changing automation seen as vital to Britain’s industrial future. The warning was made on the back of a major survey published by Make UK and Infor.
The survey shows that companies are fully committed to investing in AI, Machine Learning and other automation to improve productivity, processes and efficiency. However, despite this, a majority of manufacturers believe the UK is falling behind competitors and hampered by access to key technical and digital skills, as well as short term policy incentives which do not match investment cycles or, expected returns on investment (ROI).
In response, Make UK is calling on Government to reform the Apprentice Levy to help expand Britain’s technological skills base, roll out a widely proven scheme to help boost digital adoption by SMEs and, introduce a better approach to the tax system with policies which match the average investment cycle of manufacturers and expected ROI.
Commenting, Verity Davidge, Director of Policy at Make UK, said: “The adoption of AI, automation and other game changing technologies by manufacturers is rapidly accelerating and will provide vital pieces in solving the productivity puzzle. But, there is still more to be done to match our competitors, especially among SMEs who face far greater hurdles in adopting digital technology.
“As well as tackling the digital skills barrier which remains the biggest hurdle, Government should roll out the Made Smarter scheme across the UK. This has a proven success in delivering step change for SMEs on their automation journey.”
Andrew Kinder, SVP, Industry Strategy, Infor, added: “We are seeing a substantial shift in the adoption of digital automation as manufacturers seek to improve efficiency, instill agility and drive greater productivity. While generative AI is still in its relative infancy, intent to capitalise on it is incredibly encouraging with many companies saying they are ‘aware of and planning to use’ the technology.
“Actions, however, speak louder than words. While the government clearly has a role to play in supporting AI adoption, manufacturers have an opportunity to take control in bridging the gap between intent and value in creating first-mover advantage. The technologies are now widely available, affordable and come with a typically fast return on investment, which all help manufacturers compete in increasingly challenging conditions.”
According to the survey, more than half of companies (55%) have already implemented or, are planning to implement, AI and Machine Learning to automate decision making processes and improve operational efficiency. In addition, four fifths of companies have already introduced or, are planning to introduce, Augmented Reality and Virtual Reality techniques in areas such as design and prototyping.
More than three quarters of companies (76%) have invested in automation, while almost six in ten (59%) plan to increase their expenditure this year compared to last. Furthermore, a fifth of companies plan to automate between a quarter and half of processes in the next two years, while a further quarter plan to automate between 10% and 25%.
These investments are aimed at improving manufacturing processes (65% of companies) and product design & development (49%) with companies seeing significant benefits of improved productivity (60%) greater labour efficiency (49%) and a similar number seeing better quality.
However, despite this positive picture, 40% of companies believe the UK is falling behind competitors in adopting automation. Robot density in the UK is currently at 101 units per 10,000 workers, below the average of 126 units globally. Overall, the UK ranks 24th globally and is the lowest of the G7 nations (1).
According to the survey, significant barriers to investing in automation are a lack of technical skills cited by almost half of companies (48%) and, a similar number integration and data challenges (41%). More than a third of companies cite high costs and workplace culture (38% and 36% respectively) as barriers.
In addition, the survey shows a clear mismatch between policy incentives designed to boost investment and the expected ROI. More than eight in ten companies expect up to five years for a positive impact of investment. In contrast, more than half of manufacturers (56.4%) believe Government policies are not sensitive to the time needed to see a ROI.
To help address these barriers and, boost further automation, Make UK has made the following recommendations:
- Roll out the successful Made Smarter scheme nationwide. This is a proven scheme to help with the adoption of new technology in manufacturing businesses. It should also extend the remit of Made Smarter to include industrial decarbonisation to aid energy efficiency and transition to net zero.
- Make full expensing capital allowances permanent to enable businesses to plan investment over long leads.
- Expand the R&D tax credit to include capital expenditure to spur further digitalised R&D.
- Government should work with business organisations and sector specific bodies to help SME engagement with the successful Catapult Centres. This is especially important given the geographic distribution of the centres and would help more SMEs take advantage of their world leading facilities.
The survey of 135 companies was conducted between 21 June and 12 July.
