1. The Future of Manufacturing: A new era of opportunity and challenge Professor Steve Evans, University of Cambridge

2. 2 Scope Foresight Future of Manufacturing Project Objective has been to investigate changes and uncertainties facing UK manufacturing activities, to 2050 where possible, to inform how the UK can create and capture future value. Vince Cable is the sponsoring minister. Findings available for BIS to use to inform development of future policy.

3. 3 10% of UK economy (1973: 29%) Employs under 3m people (1966: 9m) Similar trends elsewhere Manufacturing share of GDP 1990-2010 A recent context of historical shifts… Foresight Future of Manufacturing Project: 7 th November 2013

4. 4 With areas of weak relative performance…...and some areas of strong relative performance Share of manufacturing exports in manufacturing output Strong total factor productivity Increasing proportion of output exported Expenditure on manufacturing R&D Levels of capital investment Falling share of global exports Foresight Future of Manufacturing Project: 7 th November 2013

5. 5 Share of manufacturing exports in manufacturing output Absolute value: 10% of GDP (£139 bn in 2012) Exports: 53% of UK exports in 2012 (£256 billion) R&D: 72-79% UK business R&D spend 2000-11 Productivity: growth 2.3% p.a. (1980-2009) UK 0.7% Jobs: high skilled and well paid Resilience: provides resilience in face of recession The sector makes powerful contributions to the UK economy Foresight Future of Manufacturing Project: 7 th November 2013

6. 6 Timetable Scoping Jan-Mar 2012 Research Apr 2012-Feb 2013 Synthesis Launch Feb-Jul 201328 October 2013 37 commissioned evidence papers, 2000+pages 3 international workshops Engagement with industry UK roundtable events Lead Expert Group Industry High Level Stakeholder Group Drafting of chapters Engagement with BIS & HMT

7. 7 Changing nature of manufacturing By 2050: Manufacturing will be a complex, value creating system. Emphasis not on production or services but on flexing business models and offerings to create value in new and interesting ways.

8. 8 Technological change and uncertainty By 2050: technology will drive a revolution… Incremental leaps forward (pervasive ICT; integration of sensors = big data; application of materials; sustainability) Radical developments (biological & medical developments; additive) Disruptive breakthroughs (unknown) …changing how products are designed, offered and used by customers

9. 9 Environmental change and uncertainty By 2050: sustainability will no longer be optional… Resources (materials, water, energy, land) Population (3 billion more people) wealth / age Climate change (weather events) ‘Pricing the Environment’ Standards Consumer pull …business models will have to shift to reduce exposure to commodity shocks & exploit opportunities

10. 10 Sociological change and uncertainty By 2050: we will have seen jobless growth… 170k fewer roles by 2020, no return to mass cuts - current employment levels just under 3 million 800k roles to fill by 2020 (ageing population a factor) demand for professionals, ‘hybrid’ expertise, STEM Potential for cognitive / physical enhancement? …with strong demand for workers with ‘hybrid’ expertise as countries compete on quality

11. 5 areas of long term shared interest emerged from workshops in Berlin, Washington DC and Singapore: Sustainability (emphasis on resource efficiency) Education and skills Automation Big data New models of distributed manufacturing Interests highlight fascinating balances: (1) Investment in automation versus jobs (2) Global versus local supply chains (3) Distributed versus traditional manufacturing 11 International perspectives on change and uncertainty

12. 12 Share of manufacturing exports in manufacturing output Services with products e.g. Rolls Royce Selling of technological ‘know how’ e.g. ARM Remanufacturing of products e.g. JCB / Caterpillar Manufacturers will increasingly make use of a wider value chain to create revenue. 1. More than making a product and selling it Foresight Future of Manufacturing Project: 7 th November 2013

13. 13 Share of manufacturing exports in manufacturing output #FoMn #manufacturing 2. Faster, more responsive and closer to customers Mass personalisation of products on demand Distributed: big high-tech, modular, home, mobile Greater design freedom More digital connections along value chains Foresight Future of Manufacturing Project: 7 th November 2013

14. 14 Share of manufacturing exports in manufacturing output #FoMn #manufacturing 3. Exposed to new market opportunities Changes to personal wealth / ageing populations BRICs and the ‘Next 11’ Continued global ‘fragmentation’ of the value chain Some ‘onshoring’ Foresight Future of Manufacturing Project: 7 th November 2013

15. 15 Share of manufacturing exports in manufacturing output #FoMn #manufacturing 4. Increasingly dependent on highly skilled workers Strong demand for manufacturing workers A need to accommodate more older workers Importance of STEM qualifications Blending of technical & commercial ‘hybrid’ skills Potential for human enhancement Foresight Future of Manufacturing Project: 7 th November 2013

16. 16 Share of manufacturing exports in manufacturing output #FoMn #manufacturing 5. More sustainable Growing / urban populations raise resource demand Climate change and global supply chain vulnerability Volatility in price & availability of commodities Reuse, remanufacturing, recycling: circular economy Foresight Future of Manufacturing Project: 7 th November 2013

17. Foresight Future of Manufacturing Project: 30 th October 2013

18. Future of manufacturing Lean & Clean: (eco)-efficiency Never can say goodbye: closed loop Make it anywhere: local making Keeping in touch, experiments, selling service Knowing me, knowing you: using big data Kissing frogs: new collaborations Slow making, provenance, high value this is a personal (Steve Evans) picture