The UK’s reindustrialisation strategy is a key talking point for policy makers, innovation-led companies and manufacturers alike, as they consider the growth potential it could bring for businesses and the economy. But how far will they go to back reindustrialisation?
The decline of Britain’s manufacturing industry is evident in the latest World Bank and OECD data, which shows that the share of GDP attributed to manufacturing has fallen from 30 per cent in the 1970s to 16 per cent in 1990 and eight per cent in 2023. Critically, the UK has lost both manufacturing capacity and capability over time, which will make reindustrialisation all the more challenging.
A sustained lack of business investment over decades, combined with a reliance on Foreign Direct Investment (FDI), which has to some extent eroded the UK’s industrial autonomy, has left the UK with a productivity problem and hampered its competitiveness. Many manufacturers chose to offshore production to, at the time, low-cost countries in regions such as Asia and South America many years ago. Since then, these countries have accelerated their capabilities and skills to lead the world stage in technological advancements. However, the current climate of chaos and disruption-prone supply chains, is encouraging a growing number of manufacturers to think again. Focusing production in the UK, or as close to their end market as possible, could improve operational resilience as well as creating an opportunity to add value and contribute to the UK economy by upskilling workers and investing in AI and automation.
The UK government’s soon-to-be-launched industrial strategy – Invest 2035 – aims to provide businesses with greater certainty about the conditions they can expect to face over the next 10 years. Whilst there isn’t much detail to go on, eight growth-driving sectors have been identified where the opportunity to realise growth and boost the economy is greatest. Whether greater certainty will be enough to facilitate the level of business investment needed to reshore facilities or develop new ones, improve infrastructure, apply advanced technologies, configure supply chains and strengthen the skills base, remains to be seen.
The threatened closure of the British Steel plant in Scunthorpe, and the government’s decision to intervene, underlines the significance of important facilities to the country’s reindustrialisation strategy. If the plant was allowed to shut down, the UK would be reliant on steel imports for vital infrastructure as well as meeting the needs of the construction, defence and rail industries. Further assurances of the government’s commitment to support critical sources of supply, such as British Steel, may be needed to enable reindustrialisation.
For businesses developing products of the future, such as battery-powered EVs or clean energy storage solutions, reindustrialisation could be a major opportunity to accelerate growth by supporting the mass production of high-quality products at a competitive price. Transitioning from a business model focused on innovation or product optimisation, to one focused on product industrialisation, will require a clear strategy, based on an accurate understanding of the product’s market potential and forecasted demand over a set time period.
Key to a company’s industrialisation strategy is investment and knowing where it is coming from. Leaner, innovation-led businesses will be relying on third-party investment such as private equity or alternative finance and knowing how much funding they need over what timeframe is vital. For larger manufacturers with complex, global supply chains, investment might be needed to reshore operations or introduce efficiency-driving technologies. Understanding where current revenues are coming from and knowing how long the transition will take, and allocating investment accordingly, could make the difference between success or failure.
Configuring a robust supply chain to support a company’s product industrialisation strategy will also be necessary, and professional support may be needed to identify suitable suppliers and forge strong partnerships. They are likely to be focused on developing local ecosystems, which may lack capacity currently, which means they might need additional support in upskilling workers or investing in automation. Taking a collaborative approach by supporting downstream suppliers and making this a core part of the product industrialisation strategy, could help to smooth the transition and facilitate an early-mover advantage.
With so much interest in reindustrialisation, it could be tempting for legacy industries, such as mining, to make a comeback. Whilst there is some potential for lithium mining in the UK, and planning permission has recently been granted to a new commercial facility in Cornwall, the industry could take a decade or more to establish itself, which means UK-based Gigafactories will have to look elsewhere in the short term.
The government’s modern industrial strategy could provide the impetus needed to help turn the tide for the UK’s manufacturing industry by boosting productivity and onboarding new capacity and capability. In supporting the UK’s reindustrialisation, however, it must also ensure that the manufacturing powerhouses of the future are better, more efficient and greener by design.
Sheena Patel, a director and specialist in high-value manufacturing at Vendigital
Radio wave weapon knocks out drone swarms
I hope they have assessed how easy it is to shield a drone against the attack. Hopefully the shielding would add too much weight.