Addressing key topics within the manufacturing sector.
The shape of modern manufacturing
The nature of manufacturing has changed to reflect advancements in the supply chain, markets, customer demands and engineering design. Data and product innovation now play major roles in the industry; today’s manufacturing is often capital-intensive and automated, with a highly skilled and educated workforce. Service innovation and collaboration with supply chains have introduced new avenues of growth for manufacturers, who are adapting their business models to take advantage of the global markets.
UK manufacturing is a vibrant and resourceful part of the economy that is well-placed to deliver growth in globalised markets, to the benefit of the UK economy as a whole. Manufacturing companies capture market share through innovation, an emphasis on quality and increasingly through their service offerings. There are multiple layers to the manufacturing story, and oversimplified generalisations do not reflect how agile and flexible manufacturers need to be to meet new market demands.
The Government spends an estimated £220 billion in public procurement. Making the best use of this spending through more effective procurement arrangements will contribute towards reinvigorating manufacturing and technological industries, and help to deliver public services at a reduced long term cost.
Evidence from the National Audit Office shows that procurement is not used effectively to stimulate innovation. There are concerns that government procurers are ‘risk averse’, preferring to purchase tried and tested products and services. Procurement innovation requires a level of technical expertise to fully comprehend the innovations in development. The IET is concerned that too often procurers do not have, or are unable to easily access, this level of technical expertise.
SMEs can struggle to access public contracts. There are a number of positive initiatives across government to support procurement including the Small Business Research Initiative and the Forward Commitment Procurement Initiative. Early evaluations suggest that these programmes are having a positive impact on the procurement process. Government must continue to monitor the proportion of public contracts that are awarded to SMEs to ensure that SMEs have the support they need to compete for public contracts.
An industrial strategy
An industrial strategy must set out, in simple terms, the high level tactical objectives that it is seeking to achieve. Generating economic growth is an outcome from a strategy not a strategy in itself. The process of identifying these strategic objectives should not sit solely with Ministers and civil servants in Whitehall, but should involve active engagement with all sections of industry.
Strategic objectives often involve trade-offs between competing priorities; where there are potential conflicts between different objectives, these should be acknowledged and the reasons for prioritising one objective above another should be provided. Equally, an industrial strategy must detail key performance indicators against which policy should be measured.
There is a strong sense of continuity and long-term planning that characterises manufacturing businesses, so any intervention/investment must also be consistent and long-term. Manufacturing companies have a proud record of self-reliance, but this can deter government from understanding how they can provide support.