NEWS n BRITAIN’S MANUFACTURERS ARE AT risk of missing out on innovation and productivity benefits by not investing in AI and other forms of automation and digital technologies, according to a report published by Make UK and Autodesk. The Future Factories powered by AI report examines the opportunities and challenges for UK manufacturers and suggests how Government initiatives and regulation could support the adoption of the new technologies. It shows that although manufacturers are using AI tools widely across their business – in particular, to manage energy use and reduce waste – only 16% claim to be knowledgeable about AI’s potential uses. As a result, only 36% of companies are using it in their manufacturing operations, with Make UK warning of significant implications for the UK’s efforts to raise productivity. The 25-page report also reveals that large companies are more than twice as likely as SMEs to be adopting AI (71% and 28% respectively). Barriers cited include a lack of knowledge of how to apply AI, and limited access to technical and digital skills. Lower adoption rates among SMEs are preventing them from achieving the increased profits reported by almost a quarter of companies, and an ability to take on further work reported by almost a third. UK manufacturers are using AI for applications ranging from predictive maintenance to supply chain optimisation. The biggest benefits they cite are increased efficiency (69%), improved productivity (61%) and the automation of routine tasks (46%). The report also shows that a quarter of companies are using AI as part of their efforts to decarbonise, with 93% using it to optimise energy consumption, 64% to reduce waste and emissions, and 57% to improve resource efficiency. Three quarters of companies say they are planning to increase their AI investments in the coming year. While the adoption of AI across businesses is increasing, the report also says the use of digital tools remains “disappointingly low”. Only 16% of companies use them, with 38% considering using them, and 29% not planning to use them at all. “AI and automation are driving dramatic change in speeding up manufacturing processes and elsewhere in companies,” says Nina Gryf, digitalisation lead at Make UK. “Their potential to drive economic growth and reshape industries is becoming increasingly clear, and the manufacturing sector and its factories of the future have a central role to play. However, while the uptake of such technologies is increasing, the UK needs a step change in the use of automation, otherwise it risks missing out on vital transformative productivity gains.” According to Make UK, there have been welcome initiatives from Government including the national rollout of the Made Smarter programme and a doubling of the funding for the Alan Turing Institute. However, given the barriers that remain for SMEs, in particular, there need to be greater efforts by industry to overcome awareness and cultural challenges by sharing peer-to-peer learning and best practice, Make UK suggests. In addition, Government should take additional measures including extending the R&D tax relief to cover investment in capital equipment. UK manufacturers ‘losing out by not adopting AI’ www.drivesncontrols.com January 2025 7 Where UK manufacturers are using AI (percentage of users) Source: Make UK/Autodesk Future Factories Survey 2024 TAX MEASURES ANNOUNCED BY the UK chancellor, Rachel Reeves, in her autumn Budget, could trigger a wave of spending on automation and outsourcing, according to Tony Hague, CEO of the outsourced manufacturing specialist, PP Control & Automation. He believes that the £25bn annual rise in employers’National Insurance Contributions (NICs) will test the resilience of UK manufacturers, with some adopting new strategies to tackle high operating costs and widespread skills shortages. “She probably didn’t realise it at the time, but the Chancellor’s employment tax rises could well have given the UK the biggest push towards automation and outsourcing we’ve seen in decades,”Hague predicts. He believes many companies will invest in new technologies and partner with manufacturing specialists for non-core competences. “Our sector is highly sensitive to changes in employment costs, given its dependence on a diverse, skilled workforce,”says Hague. “NICs, representing a significant portion of employers’expenses, directly impact our operational expenditure (OpEx). “Automation and strategic outsourcing can give management teams some comfort if they can look past the initial investment and instead look at it through the joint lens of long-term productivity and efficiency gains,”Hague continues. “Automating repetitive, high-labour tasks can lead to substantial savings, including NICs, wages, and training investments, whilst also freeing up team members to take on higher value tasks. “Machines also offer consistent performance with minimal error, contributing to higher product quality and fewer costs associated with rework or quality control,”Hague argues.“You can also easily manage fluctuations in demand, whether that is scaling up or scaling down.” He reports that PP Control & Automation has already seen an increase in enquiries following the tax changes. “The strategic shifts that I believe will now play out will enable manufacturers to transform traditionally rigid cost structures into agile frameworks, allowing them to respond effectively to both current challenges and future demands,”Hague concludes. Tax hikes ‘could spark a rush to automation and outsourcing’
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