What’s driving UK manufacturing investment in 4IR?

by Neil Sharp, Group Marketing Manager, JJS Manufacturing – first published on JJS Blog

There’s no doubt that the use of automation is transforming global manufacturing, with initiatives such as robot technology, big data and 3D printing providing manufacturers with the ability to create smarter products, more streamlined processes and better solutions for their customers.

But as the recently published Barclays Intelligent Manufacturing report highlights, not all UK manufacturers are necessarily on the same page when it comes to the introduction of the Fourth Industrial Revolution (4IR.)

While some businesses have already made significant inroads into 4IR investment, many are still very much at the start of their journey as they get to grips with how the new technology will apply to their business, what benefits it will afford and what they’ll need to do to implement it.

Interestingly too, since the last Barclays manufacturers survey in 2015, many of the respondents who had declared an intention to invest in the technologies of the third industrial revolution (3IR) had yet to do so.

As the report emphasises, 4IR relies heavily on the 3IR platform, so this lack of structural investment presents a potential stumbling block for UK manufacturers who are looking to embrace 4IR and to compete on a global footing.

So why the reticence among some manufacturers to kick-start the 4IR process? As the report’s author Mike Rigby, Head of Manufacturing, Transport and Logistics at Barclays, explains, just under a quarter (23%) of those manufacturers surveyed expressed uncertainty in their likely return on investment (ROI) in 4IR technology. Among the main deterrents cited were financial constraints, concerns about a lack of skills, the potentially negative employee impact of 4IR and doubts about the benefits of the technology.

When questioned about their financial obstacles to investment, 19% of respondents said that their company lacked the funds to make long-term investments in 4IR, with the same percentage stating that their capital spending priorities currently lay elsewhere. Seventeen percent expressed concerns about the reliability of the technology and 16% emphasised the significant time investment that they believed would be required for them to identify appropriate solutions.

So what can be done to encourage action and spark a deeper investment in 4IR within UK manufacturing?

One area that the report highlights is greater availability of government grants and loans for businesses. Access to government financial support proved to be a significant influencer for 36% of respondents, with 45% of smaller operations (those companies with ten employees or less) being particularly receptive to the option of government assistance.

A lack of education regarding 4IR was the second most commonly cited factor, with thirty five percent of respondents stating that provision of additional information about the benefits and ROI of 4IR would make them more likely to invest. Thirty three percent indicated that a reduction in the cost of 4IR solutions would be pivotal in their decision and 31% said they would welcome outside support to help them implement new technologies.

And what about those UK manufacturers that are already committed to, or have already made an investment in, 4IR technology?

Encouragingly, 40% of manufacturers with an annual revenue of £1m to £10m (and 47% of companies with an annual revenue of £10m+) said they believed investment in new technologies would boost the productivity of their business.

And among those who have already invested in 4IR, 51% stated that this introduction had enhanced productivity, 28% reported increased revenue and 27% said they were already seeing evidence of ROI. A reduction in costs and the freeing up of personnel to work on higher-value activities were also cited as additional benefits by existing 4IR investors.

Increased yield was also highlighted, with just under 70% of investors reporting improvements in the yield and productivity of their business, and more than half of those stating they’d experienced gains of 10% or more.

Investors in 4IR also reported improvement in the consistency and quality of their end products, with 18% seeing improvements of 20% and above. More than half also experienced improved manufacture cycle times, with 30% saying that they’d cut cycle times by at least 10%.

So what are the strategies for success for manufacturers looking to take their first steps into the fourth industrial revolution? The report highlights four key strategies that will help to ease the process:

1. Identify where you’re at – the adoption of 3IR technology is critical to being able to successfully implement 4IR, so consider what you’ll need to do to remain competitive.
2. Join forces – reach out to supply chain partners and explore opportunities for collaboration and joint investment in new technologies.
3. Upskill your workforce – those who have invested in 4IR report significant gains in productivity so it’s vital to ensure your employees have the skills they need to implement next generation technologies.
4. Ask for help – research the opportunities for financial and practical support through government initiatives such as Digital Catapult, Innovate UK and others.

As the Intelligent Manufacturing report concludes, preparing for 4IR is by no means an easy task. However a committed investment in 4IR technology stands to benefit UK manufacturing in a multitude of ways – with a predicted boost of £102bn per annum by 2026, sector growth of more than 15% and the creation of more than 100,000 new direct jobs.