High value manufacturing

Global manufacturing is a key provider of wealth and employment, accounting for $4.4 trillion of value added world-wide.

The UK is the sixth largest manufacturer in the world and has an industry which accounts for 14% - 15% of GDP and 50% - 55% of exports, as well as employing 3 million people.

With the lowering of economic barriers to trade, the reduction in transport costs and the enabling effect of communications technology, manufacturing is highly competitive, where activity will gravitate to the countries of lowest overall cost.

Manufacturing in high-cost economies such as the UK has therefore had to change radically to remain globally competitive. This has resulted in changes to:

• The sectoral composition of manufacturing, away from the traditional areas and towards high-value, knowledge-intensive goods
• The emphasis of activities, away from just production and towards provision of lifetime service, around a manufactured product
• The business model, in terms of increasing specialisation and hence outsourcing of non-core activities
• Ownership, with the creation of large, global players, some of which are UK-owned

It should also be appreciated that the production, sale and service of manufactured products is the principal route by which wealth is realised from new technology. The continuing development of manufacturing is therefore strategically important in the UK to deriving benefit from new technology.

Against this background, the challenge for UK manufacturers is to remain competitive in this environment. This in turn translates into being continually innovative.

The Technology Strategy Board has enjoyed success already in promoting technology relevant to the competitiveness of the UK manufacturing sector and will continue to encourage research into all phases of the product or asset life-cycle, across a balanced range of industries.