+ In the UK, high value manufacturing is attracting investment.

You might be surprised to hear it, but I think that the ‘march of the makers’ that UK Chancellor, George Osborne, called for last year is actually happening. Despite appearances, I believe the UK manufacturing industry is successfully repositioning itself for a low volume, high-value future. 

I admit, however, that it may not feel like it. The UK has slipped further down the world rankings for manufacturing output – going from sixth in 2010 to ninth in 2012. And today manufacturing output per person in the UK is below that in most developing countries. All the evidence seems to point to a country walking away from its industrial heritage in favour of a service industry future. (See: UK Parliamentary Briefing Papers: International comparisons of manufacturing output).

But I think there is a very clear trend appearing in the UK manufacturing sector that shows it is perhaps further ahead than this statistic demonstrates. This is because the nature of UK output can be described as low volume, high value – such as Rolls-Royce or BAE Systems.

This high value manufacturing is attracting investment. According to recent statistics from EEF, almost three quarters of our business research and development budget in the UK is spent in the manufacturing sector – with the greatest levels of investment in the highly skilled, high-tech areas such as aerospace, pharmaceuticals and electrical where R&D is at its highest.

There is also a noticeable trend for on-shoring.  In a time of austerity, UK manufacturers are bringing operations back to the UK from Asia to prioritise quality over low costs. This has been expedited by wage rises in China and by rising fuel costs which make it more expensive to import goods. 

Over time, this will mean that the UK’s manufacturing position will improve as domestic output increases. However, it will also require new skills and training to ensure there is a highly skilled workforce available to take on this manufacturing.

Because Arup is sponsoring the Institution of Mechanical Engineers’ Manufacturing Excellence Programme, I had the opportunity to visit two companies shortlisted for this year’s (2012) awards. 

Accutronics, a battery manufacturer in Stoke-on-Trent, has been shortlisted for the Innovation in Products and Processes award. It uses feedback from customers to help develop innovative products for the market, with the hope of significantly increasing turnover in the next two years. Previously Chinese-owned, the firm has gone from strength to strength since being bought by a British owner. Looking to build on this success in the UK, they have committed to high quality manufacturing and producing excellent products.

The second company I visited was MBDA, a leading manufacturer of missile and defence systems. MBDA’s customer base and operations are restricted due to the nature of the product, however they have demonstrated the sort of flexibility in the supply chain that many high volume manufacturers will envy.

Since winning the Best Partnership with Education award in 2007, MBDA has been shortlisted for the same award three years in a row – including this year. The company clearly demonstrates a fundamental commitment to developing younger engineers to support the future of this high-tech business. They are active in encouraging young people in the local area to consider working for them and, once employed, the young engineers are mentored by a senior manager through a comprehensive apprenticeship or graduate training scheme.

Although the UK appears to be slipping down the rankings, I think this is a side effect of a purposeful re-positioning towards manufacturing high-value, complex products and developing new skills. If this repositioning is successful, the tables may well turn – with other countries looking to catch us up.