The Resurgence of UK Manufacturing

The UK is not known as a major manufacturer internationally, accounting for only 2% of global output. However, in recent years, the UK government and private companies have pushed to update and increase domestic manufacturing capabilities.

History of UK Manufacturing

As the birthplace of the Industrial Revolution, the UK’s return to investing in manufacturing brings the nation full circle. Textile manufacturing was revolutionised with the introduction of the spinning jenny, water frame, and steam engine in the late 18^th century. Soon after, steam locomotives transported goods and passengers between cities much faster than horses.

The Second Industrial Revolution marked the growth of manufacturing in the United States and other European nations with the rise of machine manufacturing. Rapid industrial expansion soon led other global powers to pass the UK in manufacturing output.

Manufacturing saw a boost in the UK during World War I, when aircraft and vehicles were manufactured for the war effort. World War II saw innovations in jet engines and radar technology. However, post-war UK manufacturing declined due to increased competition abroad. The shift from a service economy to a manufacturing economy in the UK accelerated during the Second Industrial Revolution.

The UK has seen a resurgence in domestic manufacturing over the last decade. This is in conjunction with Industry 4.0, the fourth industrial revolution. Industry 4.0 refers to smart manufacturing and technologies, including IoT, AI, and additive manufacturing.

Current State of Manufacturing in the UK

In Q1 of 2024, approximately 2.7 million people in the UK worked in manufacturing, higher than any quarter of 2023. Manufacturing currently accounts for about 23% of UK GDP, or £518 billion.

TheBeyond, a Scottish technology hub, aims to give Scottish IoT the ability to compete globally and increase Scottish innovation of Industry 4.0 technologies. TheBeyond creates a space for tech entrepreneurs to build their products with backing from larger companies that lend their resources and expertise to product development. Located in Glasgow’s Skypark, TheBeyond’s 22,000-square-foot campus is home to over 50 startups dedicated to smart innovation.

MedTech is also contributing to the growth in UK manufacturing. Medical devices and products had a 55% value-added margin to the UK manufacturing market as of May 2024, with consumer goods having the next highest margin at 26%. Industries that are quick to integrate IoT into their manufacturing processes will save on costs and increase efficiency.

Technological Advancements

In addition to product advancements, the manufacturing process also changes in accordance with Industry 4.0. In smart factories, automated machines are all connected through IoT and can be controlled and monitored from a central hub. Digital Twins can make digital replicas of the entire manufacturing process, allowing problems and inefficiencies to be flagged early. AI creates optimised process plans from machine learning, making problem solving and production more efficient.

Though technology has continuously developed since its inception, the UK is now making a greater effort to support growth through private and government investment. Sectors at the forefront of UK growth under Industry 4.0 are automotive, aerospace, pharmaceuticals, and quantum technology.

Challenges Facing UK Manufacturing

A significant benefit of domestic manufacturing is the absence of taxes and tariffs imposed on imports and exports. When the UK left the European Union in 2020, the UK and EU signed a Trade and Cooperation Agreement, allowing free trade to continue. However, many skilled labourers in the UK had immigrated from EU countries. New immigration policies post-Brexit meant that the number of skilled workers in the UK stagnated, and higher wages and recruitment costs cut into businesses’ profits.

Supply chain shortages have also impacted UK manufacturing. Transportation delays and disruptions in materials production cause price increases for businesses and, in turn, consumers. A few years after Brexit and the height of the COVID-19 pandemic, the UK supply chain is recovering; however, supply chain disruptions cost the UK economy billions of pounds in lost revenue in 2023.

Government Policies and Support

The UK government has taken action to encourage domestic manufacturing. Inventions patented in the UK qualify for lower tax rates on profits than other products. The UK also offers the lowest tax rate for manufacturers in the G7, and various exemptions and tax reliefs are also available.

In 2023, the UK government authorised £4.5 billion in funding for British manufacturing. Of this, £960 million was dedicated to clean energy to ensure the UK remains at the forefront of the global transition to net zero.

The UK government has supported various programmes to help advance the technological and manufacturing footprint across the UK. For example, the Made Smarter programme receives government funding to aid small- and medium-sized enterprises in digitising manufacturing.

The Future of Manufacturing in the UK

As the UK strides to establish itself as a modern manufacturer on a global stage, it is imperative to invest in innovation and keep up with international trends. IoT, AI, and automation are the driving forces behind successful Industry 4.0 manufacturing. Businesses must also be receptive to consumers, such as the rising demand for sustainably built products.

Sustainability

In November 2020, the prime minister published the Ten Point Plan for a Green Industrial Revolution, with a £12 billion investment. The plan emphasised the importance of clean energy from offshore wind farms and nuclear power. In addition to outlining the need for greener buildings and innovation, the plan aims to reduce carbon dioxide equivalent emissions by 180 million tonnes by 2032, ultimately reaching net zero by 2050.

Though switching to a sustainable business model can be costly, an increasing number of consumers take sustainability into account when making a purchase. As the government creates new sustainability policies in the lead-up to 2050, being an early adopter can put you at the front of the industry.

Maintaining a Competitive Edge

The UK must quickly implement new technologies to maintain a competitive edge in global manufacturing. As the ninth-ranked country in manufacturing output at the end of 2023, the UK must adapt in real-time with the industry to achieve its goal of being a leader in new product development.

The UK is establishing itself as a technology and sustainability hub for Industry 4.0 through government and industry investment. Creating programmes such as Made Smarter, which fosters innovation, and spaces like TheBeyond, which offers startups resources for success, are central to the UK’s technology and manufacturing goals. As we move into the future, more global focus will fall on sustainability. As a leader in establishing carbon neutrality goals, the UK is committed to growing manufacturing capabilities while investing in a greener future.

Pivot UK was established in 2014 as the European headquarters for Pivot International. Our Scotland-based companies, A2E and Wideblue, have expert design and engineering teams and prototyping capabilities, as well as a cleanroom at Wideblue for medical device design testing. As a global company, we have access to manufacturing locations worldwide, with 17 fully automated SMT lines. To learn more about Pivot International and our global capabilities, contact us today.