The UK’s recent economic productivity problems are well documented. Even in an environment where output per hour is declining across all OECD wealthy nations, the UK is performing more poorly than any of them1. It’s a trend that has economic policymakers scratching their heads. UK productivity per hour is 35% below the Germans, and 30% below the US. If it continues, it may cause irreparable damage as we fall behind other G7 countries.

However, November heralded some good news – as Business Secretary Greg Clark announced the Government’s new ‘Industrial Strategy’ – designed to provide a shot in the arm for UK productivity and future economic wellbeing2. With a dedicated fund investing £725 million in new programmes focusing on commercial innovation and technology adoption, the strategy sets out to realise the lofty aim of making Britain the world’s most forward-thinking nation by 2030.

What does this mean for manufacturing? Rather a lot. Because the construction, life sciences, automotive and AI sectors have been earmarked as the first to benefit from these new government initiatives and partnerships. Indeed, the Industrial Strategy could be a promised land for those manufacturers who embrace it, and the four challenges it promises to address:

1. Artificial intelligence: putting the UK at the forefront of the AI and data revolution
2. Clean growth: maximising the advantages of this global shift for UK industry
3. Ageing society: using innovation to help meet these needs
4. Future mobility: becoming a leader in enabling people to exchange products and services productively, anywhere in the world

The onus is on manufacturing to clearly demonstrate that it wants to lead this productivity revolution, chiefly through a commitment to digital transformation. The UK Government intends to spend £406m on education to address our science, technology, engineering and maths (STEM) skills shortage; raise total R&D investment to 2.4% of GDP by 2027; and increase the rate of R&D tax credit to 12%3. These are big rewards that can be grasped by manufacturers who are seen as willing to change.

The R&D investment figures are particularly poignant for the manufacturing industry. By exploiting the full potential of ground-breaking digital technologies like AI and robotics, the strategy will go a long way to nurturing a wide variety of new and existing manufacturing industries – along with the manufacturing software required to support them. creating the infrastructure to drive productivity gains and opening the door to thousands of fresh, desirable jobs.

AI in particular is already changing the manufacturing landscape. Smart capabilities, driven by machine learning and supported by Microsoft Power BI, are taking us beyond self-service to create new productivity possibilities by exploiting the value of data to optimise and automate processes, analyse results and predict future operations4. This holds the key to competitiveness.

Through its promise of partnership, the strategy will also encourage a structured approach to industry policy and best practice. This will help ensure that all areas of British manufacturing become the best they can be, regardless of region or background, because they will have the long-term support of the government behind them.

HSO creates purpose-built solutions for manufacturing companies looking to boost productivity across their entire business, including warehousing, project control, labour, rental, asset management and servicing. Explore our portfolio – and discover how Microsoft Dynamics 365 (including CRM and ERP for manufacturing), is helping manufacturers transform themselves into industry leaders.