London, UK – The United Kingdom must adopt the successful innovation strategies of manufacturing powerhouses Germany and Singapore to accelerate automation and secure a prosperous future for its industrial sector, according to a recent call from Make UK, the manufacturers’ organisation. The plea comes amidst concerns that British industry continues to lag significantly in digitalisation and robotics deployment, a trend that could cost the economy substantial growth.
Make UK’s chief economist, Dr. Seamus Nevin, highlighted in a media briefing that despite being the world’s sixth-largest economy and eleventh-largest manufacturing economy, the UK ranks a dismal 24th globally in the robotic density index, with approximately 112 industrial robots per 10,000 workers – half the EU average. This “sluggish adoption” of advanced technologies is causing the UK to fall behind in productivity and economic growth, threatening living standards, wages, and job creation.
The UK’s Automation Lag and Its Economic Implications
A report by Make UK, titled “Making it Smarter: Global Lessons for Accelerating Automation and Digital Adoption in UK Manufacturing,” suggests that targeted innovation and digital investment could inject an additional £150 billion into the UK’s GDP by 2035. However, manufacturers in the UK face significant hurdles, with nearly half citing a lack of technical skills as a primary barrier. Other challenges include integration and data issues, high costs, and a negative workplace culture.
The UK’s productivity rates continue to be a concern, with estimates showing them to be 0.8% lower in Q4 2024 compared to a year prior, and 19% lower than the USA. This issue is exacerbated by a severe labour crisis and skills shortage within the manufacturing industry, where 97% of manufacturers report difficulties in hiring and retaining staff.
Lessons from Germany: A Blueprint for Industrial Excellence
Germany stands as a global leader in industrial automation, consistently pioneering innovation and efficiency. Its success is deeply rooted in several interconnected factors:
Strong Engineering Tradition and Industry 4.0 Leadership
Germany boasts a long history of engineering prowess, reflected in its ability to design and manufacture world-class automation systems. The country has been at the forefront of the Industry 4.0 movement, integrating traditional manufacturing with cutting-edge digital technologies like the Internet of Things (IoT), data analytics, artificial intelligence (AI), and machine learning. This approach creates smart factories where machines communicate and adapt, revolutionising manufacturing processes.
Advanced Manufacturing Ecosystem and R&D Investment
German companies benefit from a robust and integrated manufacturing ecosystem, where suppliers, equipment manufacturers, and service providers collaborate closely, facilitating rapid adoption of new technologies. Germany’s significant investment in research and development (R&D) further fuels innovation, with 83% of company R&D spending in Germany occurring within manufacturing. The increased use of industrial robots in Germany has not only boosted efficiency and lowered unit costs but has also driven growth in the manufacturing sector and created jobs, challenging fears of automation-induced job losses.
Singapore’s High-Value Manufacturing Strategy
Singapore offers another compelling model for the UK, particularly in its strategic shift towards high-value, advanced manufacturing.
State-Led Industrial Strategy and High-Tech Focus
Recognising it can no longer compete on high-volume, low-cost production, Singapore has implemented a deliberate, state-led industrial strategy to build global leadership in advanced manufacturing. This includes a strong focus on advanced electronics manufacturing, precision engineering, chemicals, and pharmaceuticals. The “Singapore Manufacturing 2030 Strategy” aims to increase the manufacturing sector by 50% by 2030, prioritising qualitative transformation alongside quantitative growth.
Investment in Automation, Skills, and Infrastructure
The city-state has heavily invested in automation, robotics, and Industry 4.0 technologies, establishing itself as a leading hub for smart manufacturing. Singapore ranks among the most robot-intensive manufacturing sectors globally. This success is supported by cultivating world-class talent through sponsored research partnerships and subsidised worker training, alongside providing a strong digital infrastructure and favourable government policies, including tax incentives and strategic investments in AI and machine learning. The government actively supports automation through initiatives like the Smart Nation Initiative and Industry Transformation Maps (ITMs), which provide blueprints for integrating Industry 4.0.
Make UK’s Recommendations for the UK
To bridge the automation and productivity gap, Make UK has put forward several key policy recommendations for the UK government:
- Nationwide Rollout of ‘Made Smarter’: Expand the successful ‘Made Smarter’ scheme across the entire UK. This proven initiative supports SMEs in adopting new technologies. Its remit should also be extended to include industrial decarbonisation to improve energy efficiency and meet net-zero targets.
- Permanent Full Expensing Capital Allowances: Make full expensing capital allowances permanent to enable businesses to plan long-term investments with greater certainty.
- Expand R&D Tax Credits: Broaden R&D tax credits to cover capital expenditure, further incentivising investment in innovation.
- Address Skills Shortages: Work with companies to tackle the persistent shortfall of technical skills in the workforce and reform the Apprenticeship Levy.
Make UK’s Digitalisation Lead, Nina Gryf, emphasised that while the uptake of AI and automation is increasing in the UK, a “step change” is needed to prevent the country from missing out on “vital transformative productivity gains.” By learning from the strategic and sustained approaches of Germany and Singapore, the UK manufacturing sector can unlock its potential for growth, innovation, and global competitiveness.
