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Opinion: Can we create a manufacturing powerhouse to drive the new economy?
Tom Lawton, Partner & Head of Manufacturing at accountancy firm BDO shares his thoughts on how creating a manufacturing powerhouse could lay the fundamental foundations for a successful and well-balanced UK economy.
Rapid developments in technology and regulation, the growth of populist politics, an uncertain relationship with the EU and opportunities for a whole raft of new trade deals across the globe means that many of the boundaries that once shaped the way manufacturers do business are changing or disappearing altogether.
But despite these and other uncertainties, it is promising to see the sector’s resilience, with manufacturers pushing forward and generating a continued strong performance.
However, it is likely that manufacturers will face significant challenges in the short and medium term. As the dynamics of our trading relationships change, they will need the support of government in dealing with these challenges.
BDO’s New Economy research is our contribution to the debate of what Britain’s post-Brexit economy should look like. We believe that a ‘new economy’ is needed which makes the most of the UK’s talents, skills and entrepreneurial spirit. It is an economy which, despite Brexit, is outward-looking and helps its home-grown manufacturing businesses expand abroad. And it is an economy which puts the UK’s entrepreneurially spirited, mid-sized manufacturers at the heart of its thinking; businesses which we feel are too often overlooked and undervalued by policymakers.
To create a truly sustainable and balanced ‘new economy’ we believe policymakers must focus on fuelling the growth of sector powerhouses like manufacturing, and our report suggests some detailed policies with a particular focus on helping the manufacturing sector grow.
At the centre of our policies for the building of a new economy is the requirement for a long-term industrial strategy. Whilst we welcome the Government’s comments about developing an industrial strategy, we have not yet seen the rhetoric being turned into clear and decisive action. The UK manufacturing sector needs a strategy that is comprehensive, based on a genuine understanding of the needs of industry and is long-term.
Manufacturing is a long-term game and much of the sector relies on significant capital investments which pay off over years or even decades. The implications of Industry 4.0 on the manufacturing sector will be wide ranging but will almost certainly require significant investment in technology and skills and will almost certainly require constant evolution as a result of new technologies and processes.
Therefore it is critical that the Government builds a strategy over the long term (15 to 20 years), which avoids the disruptions of the political cycle. This should include setting a formal target for manufacturing growth over the next five, 10 and 20 years to provide the background to a sustainable industrial strategy.
Despite its relative decline in the past few decades, in my view the manufacturing sector, including its connected service industries, is still the most critical part of the UK economy. If properly supported, Britain’s historic strengths in manufacturing, engineering, innovation, design and service – as well as the significant potential that the move to more automated/digitised manufacturing offers – provides the fundamental foundations for a successful and well-balanced UK economy.