Encocam 25th Anniversary Event
Manufacturing Trends and
Government Approach
19 April 2013
Caroline Jackson
Department for Business, Innovation and Skills
Manufacturing Trends
•Share of the UK economy around 11% in
2011 – this is line with a number of
developed countries e.g. France and US.
•Although Germany enjoys comparatively
buoyant manufacturing sector accounting
for 22% of its total economy.
30
Manufacturing GVA % of Total Economy
•In 2011, manufacturing accounted for
£148bn of UK GVA
•In 2010, the UK remained the 9th largest
manufacturing nation in value of output
Manufacturing GVA % of total economy
28
26
24
22
20
18
16
14
12
10
1990
1992
1994
1996
1998
2000
France
Germany
United Kingdom
United States
Developing economies
2002
2004
2006
Japan
World
2008
2010
Manufacturing is Changing
Manufacturing Output and Productivity
•Manufacturing output has remained steady
•Manufacturing employment has fallen – 4.9m
jobs in 1990, 2.5m in 2011, however...
•Productivity over same period more than
doubled.
•Employees are more skilled than in most
sectors and has high GVA per employee.
260
240
220
Index (1985 = 100)
•Manufacturing accounts for 53% of all UK
exports, 72% of all R&D, contributes
disproportionately to overall levels of
productivity and thus the innovation which
drives growth.
Indices of Manufacturing GVA and GVA per hour worked
(Volumes, 1985 = 100)
200
180
160
140
120
98
_1 5
98
_1 6
98
_1 7
98
_1 8
98
_1 9
99
_1 0
99
_1 1
99
_1 2
99
_1 3
99
_1 4
99
_1 5
99
_1 6
99
_1 7
99
_1 8
99
_2 9
00
_2 0
00
_2 1
00
_2 2
00
_2 3
00
_2 4
00
_2 5
00
_2 6
00
_2 7
00
_2 8
00
9
100
_1
•UK strengths in High Value Manufacturing –
Automotive, Aerospace, Pharmaceuticals.
•Manufacturing remains important to the
success of other key sectors
Gross Value Added
Gross Value Added per hour worked
Government approach to the Economy
The Government’s strategy to achieve strong, sustainable and balanced growth set out
in Budgets and Autumn Statements:
• Growth Review: Forensic examination of
barriers to and opportunities for growth
• Industrial Strategy: working in collaboration
with business and looking to the long-term to
support future industrial capability
• Wider activities for growth: all departments
are undertaking initiatives to drive growth such
as Red Tape Challenge, investment in
infrastructure etc
Difficult economic climate
Quarter-on-quarter GDP Growth
1.5%
1.0%
0.5%
0.0%
-0.5%
-1.0%
-1.5%
-2.0%
-2.5%
20
0
20 8 Q
0 1
20 8 Q2
0
20 8 Q
0 3
20 8 Q4
0
20 9 Q1
0
20 9 Q
0 2
20 9 Q3
0
20 9 Q
1 4
20 0 Q1
1
20 0 Q
1 2
20 0 Q3
1
20 0 Q
1 4
20 1 Q1
1
20 1 Q
1 2
20 1 Q3
1
20 1 Q4
1
20 2 Q
1 1
20 2 Q2
1
20 2 Q
12 3
Q4
• Fiscal consolidation: sustainable public
finances
• Monetary activism: meeting the inflation
target and increasing the availability of credit.
Manufacturing is key to Government plans to rebalance the economy across sectors
and regions, and to deliver long term, sustainable growth
Government approach to Manufacturing
•The Government has focussed on Advanced Manufacturing where
the UK has the clearest competitive advantage
•The approach includes addressing key market failures around:
– skills supply at all skills levels
– the commercialisation of technology and innovation
– investment
– strengthening UK supply chains
– promoting the image of the sector
•And close working with industry – Government engages with the
manufacturing sectors in a range of ways, including Sector Forums and
Leadership Councils, Annual manufacturing summits, and through the
BIS Local Network.
•Manufacturing also benefits from a range of Government actions to
improve the general climate for business
Industrial Strategy
Working with industry to set out a long-term, whole of Government approach to
support for business. Initially focussed on 5 key themes:
– Sectors: Developing strategic partnerships under three broad areas –
knowledge-intensive traded services, advanced manufacturing and enabling
sectors. Sector Strategies for Aerospace, Nuclear and Oil and Gas have now
been published.
– Technologies: supporting emerging technologies, addressing market failures,
especially development phase. TSB to concentrate on supporting technologies
with potential to grow and spill over into wider use.
– Access to finance: launching the Business Bank, increasing diversity in supply of
finance and coherent service to viable growing businesses. £300m investment to
support start up lending to SMEs.
– Skills: leveraging investment by private sector. Give employers more control of
how Government funding for vocational training is spent (e.g. Employer
Ownership pilot)
– Procurement and supply chain capability: government shifting to more strategic
relationship with suppliers
Support for Manufacturing
Growth Review Framework published December 2010
Published as part of Government’s Plan for Growth. Actions seek to
address:
• Improving Manufacturing Productivity
• Commercialisation of Technology
• Developing a skilled workforce
• Promoting the image of the sector
Implementation complete. Next stage is measuring impact.
Recent actions
• Advanced Manufacturing Supply Chain Initiative: Supports innovative projects where UK is well placed to take a
global lead. Successful bids for Rounds 1 and 2 projected to secure or create 18,000 jobs. Additional £120m to run two
further rounds secured. Competition Brief for Rounds 3 and 4 published and Guidance Notes now available.
• Launched the reformed Manufacturing Advisory Service in January 2012.
• High Value Manufacturing Catapult, opened in October 2011
• 16 new university-based Centres for Innovative Manufacturing, to support emerging science in areas of strategic
opportunity for manufacturing and address the long-term manufacturing research challenges.
• March announcement of 13 further successful bids to open University Technical Colleges, bringing total number of
UTCs to 45.
• Foresight Manufacturing Project: 2 year project investigating future of manufacturing to 2050, reporting Autumn 2013.
• Annual Investment Allowance Temporary – 2 year – tenfold increase in threshold to £250,000
• Further 1% cut in Corporation Tax to 20% in 2015
• R&D tax credit rate for large company R&D increased to 10%
Skills
Engineering Skills shortage: Government working with industry to shore up the engineering skills pipeline.
British employers currently face a workforce with insufficient skills which are critical to many industries of
the future and to our international competitiveness. Project Team to report Summer 2013.
Apprenticeships
Apprenticeship starts 2010/11
20,000
18,000
16,000
14,000
Apprenticeship Starts
• Apprenticeships are at the centre of our workplace training
offer, delivering job-related, transferable skills.
• Focussing on improving quality of apprenticeships as well as
quantity, including developing more higher level
apprenticeships.
• Support from key companies including Airbus, Shepherd
Offshore and GM Vauxhall, who all stand to benefit from world
class, nationally accredited training delivered in the workplace.
• Apprenticeship starts in manufacturing and engineering in
2010/11 totalled 48,970 – up almost 30% on 2009/10
12,000
25+
19-24
Under 19
10,000
8,000
6,000
4,000
2,000
0
2009/10
2010/11
Academic Year
• Provisional figures for 2011/12 show there 57,000 Apprenticeship starts in manufacturing and engineering.
University Technical Colleges
• 45 UTC’s now announced. On course to exceed commitment to establish 24
UTCs by 2014. 5 already open, 27 due to open over September 2013 and
2014.
• Creates opportunities for more than 28,000 young people (14-19 year olds)
to train as engineers, scientists and technicians of the future.
• 38 Universities and over 400 employers now involved in UTCs.
Promoting STEM skills
•Strategy to promote and improve teaching of STEM skills in secondary and higher level education, including through
STEMNET co-ordinating a range of activities between business and schools.
Image of Manufacturing
A package of measures to help change perceptions of
manufacturing.
Made in Britain exhibitions
focussing on success, capability
and growth
Queen Elizabeth Prize for
Engineering launched 17
November 2011
Make it in Great Britain
Campaign an exhibition of the
best of innovative British
manufacturing held at the
Science Museum summer 2012
See Inside
Manufacturing initiative
that encourages young
people to consider a
career in manufacturing.
First winners £1m bi-annual prize
announced in March 2013
Exports
Exporting forms a core strand of the Government’s Plan for Growth
The Government’s ambitions:
•Doubling UK exports to £1 trillion a year by 2020;
•Getting 100,000 more UK companies exporting by 2020;
•Getting one in four UK companies to export (European average) rather than one in five at present; and
•Maintaining the UK’s position as the most favoured location in Europe for inward investment and
doubling the UK’s stock of FDI to £1 trillion by 2020
UK exporters
account for
70% of
business
R&D.
UKTI will seek to double its client base to 50,000 over the next three years.
SMEs key to improving export performance. National Export Challenge to get up to a further 100,000
SMEs to export. Initiatives include:
•Open to Export web resource, launched October 29, will provide SMEs with professional export advice
allowing peer to peer advice and information sharing
•‘How to’ export guide for intermediaries to share with clients
London 2012 Olympics & Paralympics widely regarded as the ‘greatest’ Games ever, and showcased
Britain at its very best to the world.
Next Steps
• Continuing to engage with whole range of
sectors through our work on Industrial
Strategy - development of sector strategies
including for automotive, agri-tech, and
renewable energy.
• Local Enterprise Partnerships and
Enterprise Zones grasping local
opportunities, with advanced manufacturing
providing opportunities for local companies.