"Forget the Dickensian image of workhouses and cotton mills or the 1970s picture of striking car plant workers," says Andy Neely, deputy director of AIM Research who led the project. "Today, manufacturers are not just producers they are also inventors, innovators, supply chain managers and service providers."
This is one of the misconceptions documented by the study, which grew out of a forum convened by AIM and the Confederation of British Industry (CBI). The responses of senior representatives attending the forum from business, academic and policy communities, illustrate the extent of misunderstanding about manufacturing and UK manufacturing, in particular:
The ten myths:
- Manufacturing is a homogenous sector
- The UK can flourish without manufacturing
- Manufacturing equals production
- Value only lies in products
- High-value manufacturing can only be pursued in developed economies such the UK
- R&D must remain in the UK to capture value
- Manufacturing capabilities can be developed quickly
- Manufacturing is low-skilled
- We know the skills needed for the future
- Government is needed mainly to procure wisely and bail out failing companies.
"The perpetuation of these ten myths must not be taken lightly," says Professor Neely. "It is essential for the future of the UK economy that they are dispelled." In line with this, and with AIM's objective to impact on management practice, the report outlines the reality behind these manufacturing myths.
Manufacturing covers various activities that need to be coordinated and performed in order to deliver a physical product. It also encompasses increasingly global, inter-connected, multi-partner and multi-business elements. In order to compete with places such as China, where there is more investment in R&D than in most countries, UK firms must set their R&D strategy in a global context, and constantly adapt their business models, product offerings, processes and service systems to deliver higher value manufacturing.
Rather than believing that the UK can survive as a service economy alone, manufacturing and services need to become more integrated. The manufacturing industry must place greater economic value in services, and develop technologies and new business models to address the provision of services related to their products.
Rather than focusing solely on short-term performance goals, manufacturers should invest in hard to replicate assets, metrics, operations and practices that have the potential to generate growth when the economy recovers.
Modern manufacturing environments are fast moving, and involve the application of scientific principles, new technologies and the latest management thinking. They require a highly-educated and an increasingly mobile workforce, which UK industry, Government and educational institutions need to work together to provide. Ongoing training is vital to keep up with changing skills needs.
"In order to prepare for the economic upturn, we must develop government policies that are aimed at enhancing the performance and competitiveness of manufacturing," concludes Professor Neely. "These should take into account industry, firm and product-specific characteristics. The Government must constantly monitor the economic conditions for manufacturing in the UK, making proactive interventions wherever and whenever necessary."
A copy of the report can be downloaded from: http://www.aimresearch.org/Publications/executive-briefing/future-of-manufacturing/
