Innovation scares UK's mid-sized manufacturers

Slow take-up of technology is a key reason why the nation's mid-sized firms risk stagnation.

by Rebecca Smith
Last Updated: 25 Feb 2016

This year’s World Economic Forum summit at Davos was dominated by excitement about the ‘fourth industrial revolution’. Apparently, we're on the way to a world where machines will interact with and respond intelligently to the physical environment. WEF chairman Klaus Schwab said, ‘We stand on the brink of a technological revolution that will fundamentally alter the way we live, work and relate to one another.’

Heralding a transformation ‘unlike anything humankind has experienced before’ might sound like a line from a futuristic sci-fi film, but the developments surrounding robotics and digital technology have also brought reasonable concerns about their impact. A recent report from Citi, the US bank and the Oxford Martin School, warned of how disruptive automation will be to the world’s poorest areas.

It’s also set to have a range of effects on the UK’s working practices. Britain’s biggest firms have the international reach to adopt new technologies without too much pain and smaller companies are nimble enough to avoid being ‘stifled by process’ and 'established corporate structure', according to a new report from NatWest. But the outlook isn’t quite so good for those stuck in the middle, who could well be left behind, feeling cautious about innovation and risk. The report found that Britain’s mid-sized manufacturers often lacked guidance and help – many business leaders weren’t actually aware of the government support on offer for overseas expansion and R&D.

The poll of some 300 manufacturing execs in charge of firms with a turnover between £5m and £50m found that while two thirds thought technologists will be the most in-demand skill set by 2050, there was little desire for exploring how to meet such needs. Less than a third (31%) thought access to nanotechnology and new materials would be a way to future-proof their firms, but the report said these were cited as major areas of global opportunity by industry experts.

The fault may in part lie with the firms and their execs, both in terms of blind spots about the usefulness of emerging technologies and failing to research just what’s out there in terms of R&D support. The report does though, also point to Germany as a comparison and says the UK comes up short. The support over there considerably outweighs that offered to the UK’s mid-sized firms. There’s a well-trodden network of banks, skills hubs and R&D centres, which the report said had been ‘fine-tuned for half a century’.

NatWest’s head of automotive and manufacturing, Richard Hill, warned: ‘The industry is being driven by new technology and the UK is well-placed to take advantage of that. But mid-sized manufactures are at a tipping point. We need to either really go for it in terms of mentorship and support, or stagnate and be left standing still.’

While advances in artificial intelligence, robotics and other technological change are expected to result in the loss of 5m jobs globally by 2020, the difficulty for some businesses struggling to adapt has been somewhat overlooked. Without effective support, mid-size firms risk being left behind as long as there’s slow take-up of new technologies compared to upcoming change.

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