Manufacturing Resilience: Driving recovery towards net zero

The All-Party Parliamentary Manufacturing Group recommends a national ‘Made Smarter’ service to put UK manufacturing at the heart of recovery from the pandemic and beyond to net-zero

The APMG and Policy Connect welcome The Rt Hon Kwasi Kwarteng MP, Secretary of State at the Department of Business, Energy and Industrial Strategy, to the launch of their new report on the future of the UK’s manufacturing sector Manufacturing Resilience, Driving Recovery towards Net Zero. The report recognises the good work that has been done by the government’s Made Smarter pilot supporting the sector to go digital. Learning from companies that have gone further and achieved successes despite the pandemic downturn, the APMG calls for the Made Smarter programme to be expanded to encompass resilience and net zero, and to be rolled out nationally so as to level up industry in all regions. 

By matching the most efficient operator in their sector, manufacturing companies, on average, would be 24% more profitable, would generate 30% more jobs, and would report a 9% reduction in greenhouse gas emissions.

Building on the success of their 2020 report Level up Industry, Policy Connect and the Manufacturing Commission have put forward a practical set of measures for Government and industry for building resilience and transitioning to a globally competitive, decarbonised, and sustainable manufacturing sector.

In particular, the Commission has recommended development of a national advice and support service, building on the Government’s successful Made Smarter pilot, to facilitate and develop resilience within manufacturing businesses up and down the country.

Building Resilience
The Commission found that businesses that fared best through the pandemic had prioritised non-labour efficiency – i.e. increasing the value derived from every tonne of material, litre of water, and kilowatt of energy that goes into the production process.  Alongside this, businesses cited robust supply chains and digital technology as the biggest factors in successfully adapting to disruption.

The Climate Crisis
Building resilience will be crucial in helping to mitigate the impacts of the climate crisis.  Improving energy and resource efficiency can help businesses reduce their exposure to price volatility and insulate themselves against supply-side shocks.  These actions also present an opportunity to decarbonise and embrace the circular economy, especially as consumption of raw materials accounts for around 19% of carbon emissions globally.

Skills for a Green Recovery
The report calls for urgent action to close skills gaps, which exist throughout the sector and will delay development of the technology required to meet net zero.  A more devolved and employer-led system would ensure that these skills are developed where they are needed most and the Government’s proposals for reform of technical education and training provide an opportunity to deliver these changes.

Inquiry Chair, Lord Bilimoria of Chelsea said:

“This inquiry by the Manufacturing Commission comes at a critical time for the UK’s manufacturing sector.  Prioritising resilience as part of the sector’s recovery from the pandemic will not only help businesses to build back better, but will ensure that they are prepared for future disruption.  Taking action such as improving energy and resource efficiency, embracing digitalisation, and closing long-standing skills gaps will also help the manufacturing sector deliver on the Government’s important net zero target.  The Manufacturing Commission has put forward a set of practical recommendations to ensure that UK manufacturing can be competitive, productive, and sustainable as it recovers from the impacts of Covid-19.”

Report author, Rob Allen said:

“Covid-19 has disrupted almost every aspect of the manufacturing sector, from procurement and staffing, to supply chains and fulfilment.  However, as part of this inquiry, we have been inspired by evidence from businesses up and down the country, who have risen to these challenges.  By taking action now to improve resilience, we can ensure that the UK’s manufacturing sector can stand ready to weather future disruption, help to combat the climate crisis, and continue to provide the country with the things that it needs.”

Inquiry Vice-Chair, Jack Dromey MP, said:

“As Chair of the All-Party Parliamentary Manufacturing Group, I am delighted to have been part of this comprehensive inquiry by the Manufacturing Commission.  We will not be able to rise to the enormous challenges of combatting Covid-19, mitigating the impacts of climate change, and levelling up the economy without a resilient manufacturing sector.  Neither should we fall behind competitor countries that are investing massively in their manufacturing sectors.”

Inquiry Vice-Chair, Sarah Olney MP, said: 

“It really is imperative that the corporation tax super deduction, announced in the Spring Budget, is designed and implemented in such a way that recognises our environmental obligations. If we are to reach out net zero target, then the Government ought to explore ways of using this initiative as a way of incentivising businesses to reduce their carbon emissions. Otherwise, it is a wasted opportunity and one we can cannot afford.”

Inquiry Vice-Chair, Mark Pawsey MP, said:

“As a member of the BEIS Committee, I am aware of the challenges that the manufacturing sector has faced over the last eighteen months.  However, with the right help from Government, it will be possible for the sector to recover from the pandemic and become more resilient to external shocks, whilst reducing greenhouse gas emissions.  I am pleased to have been part of this important inquiry by the Manufacturing Commission, which has drawn on a wide range of evidence from business, academia, and the third sector.”

Ann Watson, CEO of project co-sponsor, Enginuity said:

“We know to our costs that we don’t always get due warning of an impending crisis - but that’s not the case where climate change is concerned.  Advanced Manufacturing & Engineering is preparing to play its part in mitigating the worst effects. Not so long ago the green agenda was thought to have a high economic price tag attached to it - but this report shows that emulating the most efficient in the sector can generate enhanced profits, create jobs and reduce greenhouse gas emissions.  Mankind and the entire natural world would pay dearly if these findings were not adhered to.”

Andrew Everett, Executive Secretary of project co-sponsor, the ERA Foundation said:

“As the incoming Executive Secretary of the ERA Foundation I am delighted that our organisation has been a sponsor of this far reaching report. The Foundation was particularly pleased to see the report’s recommendations relating to building proactively on the lessons of manufacturing resilience learned through the pandemic crisis as well as the urgent call for action to deal with the skills gap. On the latter, we were also delighted to note the report’s emphasis on the importance of Digital Skills and government’s continued support of advanced mobile 5G internet infrastructure to drive the uptake of Industry 4.0, digital sustainable manufacturing, which is vital to achieving a sustainable, zero carbon manufacturing economy in the UK.”

An accessible screenreader version of the report is available to download.