Manufacturing (3)

The government and the business community must cooperate in order to champion and grow the UK's manufacturing sector, the UK's largest business lobby group has warned.

Speaking to manufacturing firms at the Unversity of Warwick, CBI director-general Carolyn Fairbairn said the manufacturing sector matters for prosperity, economic balance, diversification and innovation.

The CBI wants the government to give its full backing to a modern 'Industrial Strategy', where businesses work in partnership with the government to embrace long-term opportunities and trends, particularly in digital. Ms Fairbairn also emphasised the need to focus on developing the right skills in the sector, managing energy costs and encouraging more R&D investment.

Ms Fairbairn said: "Steel gives a sharp example of where we didn't think long term. Where the answers didn't come until it was too late.

"Yet the automotive industry provides the evidence that a clear, collaborative approach works. The industry came together, identified barriers holding back its productivity and puts its top three proposals to government.

"Government acted and deserves great credit for doing so. The results have been astounding."

Industrial Strategy

Ms Fairbairn outlined what the CBI believes a modern Industrial Strategy looks like. The CBI is urging manufacturing firms' plans for the future address three key questions: is the sector strategic for the UK? Is the sector globally competitive, and does the UK have a competitive advantage? And, what actions could be taken to make it more competitive?

The CBI director-general said: "Manufacturing is evolving. First is the increasing tendency for manufacturers to develop and sell services. Rolls Royce's 'power by the hour' engine service - for example - offers engine management and maintenance, at a fixed price per hour of flying.

"And in today's knowledge economy, the line between manufacturing and services is blurring even further. For example, in the creative industries the making of television programme is categorised as a service. Yet it is filmed, edited and made - and exported - with many characteristics of a physical product.

"In the years to come, as digital technologies increasingly define what we make and do, I think we'll see more creative and technology companies doing this which could be classed as 'manufacturing'."

Skills and R&D

Skills are one of the key areas currently holding back the UK's manufacturing sector, the CBI said.

"Skills can be linked to an outdated perception of what a career in manufacturing is like. I recently asked CEOs from across our manufacturing sector what worries them most about the future of UK manufacturing. It was this problem they raised first - our ability to enthuse and train the next generation.

"When you say 'manufacturing' to people today, most still think of hard labour and oil-stained clothes, not fighter jets, driverless cars or 3D printing.

"We need to offer young people a true picture of 21st century manufacturing."

Another key area in R&D. On the matter, Ms Fairbairn said: "In 2014, the government's contribution to the UK's total R&D spend was the lowest of the G7 economies - just 0.49% of GDP. In 2013/14, Innovate UK's budget was just 0.03% of GDP. Is that really the best we can do? Numbers so small they round down to zero? This investment matters."