Home Business Insights & Advice UK economy hinges on manufacturing innovation and investment

UK economy hinges on manufacturing innovation and investment

by LLB Reporter
19th Apr 23 10:47 am

The manufacturing industry is a significant driver to the UK economy. Despite the apparent de-industrialisation of the UK, the sector accounts for around 10% of the UK’s total economic output, employing approximately 2.6 million people and generating around £192 billion in annual output.

In fact, it is an absolutely vital sector for the UK’s balance of trade, contributing a whopping 45% of the country’s total exports. This makes the industry a critical source of foreign exchange for the country, boosting its GDP and creating jobs for UK residents.

Furthermore, the manufacturing industry is critical for research and development, which helps to transition the UK into a high value economy, drive innovation and progress tech in various sectors.

The UK has a strong manufacturing base, with a highly skilled workforce, and this has always made it an attractive destination for investment. However, productivity in the manufacturing industry has dragged down growth in productivity across the economy, which has been meagre since the financial crisis, Brexit, and the Pandemic. In the absence of any meaningful trade deals, Brexit also hasn’t helped exporters, so far curtailing our competitiveness within the UK’s largest market.

Productivity growth is low in the UK

Productivity measures output per unit of work. It has risen by only 7 per cent in the decade since the financial crisis, which represents a third of 21 per cent growth recorded in the decade before, according to research published by PwC.

Productivity has slowed from 7 per cent before the 2008 financial crisis to less than 2 per cent afterwards, and this has played a “significant role” in dragging down economy-wide productivity, the accountants found.

We spoke to Lizzie Houghton, managing director at Moleroda Finishing Systems, a UK based firm supplying innovative solutions to manufacturing firms.

“Innovation is crucial for driving productivity in UK manufacturing. Only by adopting new technologies, processes, and materials, can manufacturers increase efficiency, reduce waste, and improve quality.

“It’s vital for the UK to adopt and embrace innovation, not only for the sake of the domestic economy, but to compete on the global stage.

“There is no doubt that innovation leads to higher productivity, lower costs, and increased competitiveness.

Moleroda Finishing Systems supply finishing tools and equipment across the manufacturing sector, from aerospace and the medical industry, to automotive, restoration tools, and even jewellery making tools.

Lizzie Houghton is certain that adopting new technologies is crucial, not only for the UK economy, but for each manufacturing firm.

“Not only can innovation help the UK as a whole, manufacturers are able to develop new products and services by using cutting edge technology, creating new markets and opportunities for growth.

The UK has world class R&D

“The UK has a strong tradition of innovation in manufacturing, with world-class research institutions and a highly skilled workforce. By continuing to invest in innovation, UK manufacturers can stay ahead of the curve and drive productivity, ensuring the industry’s continued success and contribution to the UK economy.

To this end, industry leaders have been calling on the Government for support to help the transition into a high growth, advanced manufacturing economy.

In June this year, Moleroda is hosting the Innovations in Finishing Showcase in Birmingham. This is a free (but ticketed) event where manufacturers can see and try the latest in mass finishing technology. There will be live demos and displays.

Lizzie adds, “Many firms are looking for innovative ways to increase production, but struggle to find the cost-effective solutions they are looking for.  Other manufacturing firms feel stuck with old technologies through lack of investment and falling revenues. It has never been more important for UK firms to grasp the nettle.  Hopefully the Government will support and encourage investment in this vital sector.

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