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Buoyant returns, lax productivity. How to solve the UK’s manufacturing puzzle

by Heat Recruitment

Productivity, productivity, productivity. Hearkening back to the rallying calls of Tony Blair in the mid 1990s, productivity is one of the most significant challenges facing the UK today – particularly within manufacturing.

The UK’s automotive sector, for example, has just marked its seventh consecutive year of growth – achieving a turnover of £77.5bn in 2016. The highest figure on record. Productivity, it was reported, was also at a record high – with 11.8 vehicles produced per employee. So, with this heady turnover, and higher productivity levels than ever, why is the UK still lagging behind its G7 counterparts?

Indeed, the UK is now a full 15.1% behind the average for the rest of the G7. Philip Wales, head of productivity at the Office for National Statistics (ONS) stated: “This lower level of productivity was evident across all industries, although the size of the gap varies considerably.” Increasing the UK average productivity – just to the national average for G7 nations, would equate to a turnover of £89.2bn. The UK is missing out on just under £12bn just due to a lack of productivity.

To address this issue, in a recent pre-budget announcement, the UK government announced plans to boost R&D spending to 2.4% of GDP by 2027. In essence, this will raise spending to a total of £12.5bn per year. In addition, the government announced intentions to increase private spending, hoping to increase the total R&D spend to as much as £80bn. Productivity is a clear indicator of economic growth – an indicator that is front of mind for a solution. So, what can be done?

Productivity is defined as output per hour worked. To increase the end figure, either output per hour, or hours worked must be increased. The former is the clear victor in terms of efficiency. The requirements then, sit with both the people working, and with the technology utilised.

To boost productivity in the first instance, upgraded technology is essential. The UK has a well-earned reputation for persisting with legacy technology – systems that are, in some cases, decades old. Robotics, therefore, offers a present, effective, and most importantly, available solution. Highlighting the gap the UK must bridge – Germany currently utilises more than 300 robotic systems per 10,000 employees. The UK uses just under 25% of this capacity – 71 per 10,000. The impact is telling.

On implementing new systems, the next step is to look at training. Educating existing staff on the optimal ways of using said technology. Effective use of Augmented Reality in factory design has already been proven to increase productivity in excess of 30%. Funding is already being made available for manufacturers to upskill their workforces, with courses involving lean manufacturing, maintenance diagnostics, and even welding. The avenues to greater productivity undoubtedly exist – the time has come to invest in these strategies and secure future growth.

With Brexit on the horizon, the UK is in dire need of a productivity boost to ensure its success. Currently, whilst figures are indeed heading in the right direction, it is clear that this growth is being achieved from a place of ineffective practice. By bringing the UK’s productivity at least up to the average for the G7, the UK’s manufacturing sector will be able to perform at its peak.

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