1. Encocam 25 th Anniversary Event Manufacturing Trends and Government Approach 19 April 2013 Caroline Jackson Department for Business, Innovation and Skills

2. Manufacturing Trends Share of the UK economy around 11% in 2011 – this is line with a number of developed countries e.g. France and US. Although Germany enjoys comparatively buoyant manufacturing sector accounting for 22% of its total economy. In 2011, manufacturing accounted for £148bn of UK GVA In 2010, the UK remained the 9 th largest manufacturing nation in value of output Manufacturing GVA % of total economy

3. Manufacturing is Changing Manufacturing output has remained steady Manufacturing employment has fallen – 4.9m jobs in 1990, 2.5m in 2011, however... Productivity over same period more than doubled. Employees are more skilled than in most sectors and has high GVA per employee. Manufacturing accounts for 53% of all UK exports, 72% of all R&D, contributes disproportionately to overall levels of productivity and thus the innovation which drives growth. UK strengths in High Value Manufacturing – Automotive, Aerospace, Pharmaceuticals. Manufacturing remains important to the success of other key sectors Manufacturing Output and Productivity

4. Government approach to the Economy Difficult economic climate The Government’s strategy to achieve strong, sustainable and balanced growth set out in Budgets and Autumn Statements: Fiscal consolidation: sustainable public finances Monetary activism: meeting the inflation target and increasing the availability of credit. Growth Review: Forensic examination of barriers to and opportunities for growth Industrial Strategy: working in collaboration with business and looking to the long-term to support future industrial capability Wider activities for growth: all departments are undertaking initiatives to drive growth such as Red Tape Challenge, investment in infrastructure etc Manufacturing is key to Government plans to rebalance the economy across sectors and regions, and to deliver long term, sustainable growth

5. Government approach to Manufacturing The Government has focussed on Advanced Manufacturing where the UK has the clearest competitive advantage The approach includes addressing key market failures around: –skills supply at all skills levels –the commercialisation of technology and innovation –investment –strengthening UK supply chains –promoting the image of the sector And close working with industry – Government engages with the manufacturing sectors in a range of ways, including Sector Forums and Leadership Councils, Annual manufacturing summits, and through the BIS Local Network. Manufacturing also benefits from a range of Government actions to improve the general climate for business

6. Industrial Strategy Working with industry to set out a long-term, whole of Government approach to support for business. Initially focussed on 5 key themes: –Sectors: Developing strategic partnerships under three broad areas – knowledge-intensive traded services, advanced manufacturing and enabling sectors. Sector Strategies for Aerospace, Nuclear and Oil and Gas have now been published. –Technologies: supporting emerging technologies, addressing market failures, especially development phase. TSB to concentrate on supporting technologies with potential to grow and spill over into wider use. –Access to finance: launching the Business Bank, increasing diversity in supply of finance and coherent service to viable growing businesses. £300m investment to support start up lending to SMEs. –Skills: leveraging investment by private sector. Give employers more control of how Government funding for vocational training is spent (e.g. Employer Ownership pilot) –Procurement and supply chain capability: government shifting to more strategic relationship with suppliers

7. Support for Manufacturing Growth Review Framework published December 2010 Published as part of Government’s Plan for Growth. Actions seek to address: Improving Manufacturing Productivity Commercialisation of Technology Developing a skilled workforce Promoting the image of the sector Implementation complete. Next stage is measuring impact. Advanced Manufacturing Supply Chain Initiative: Supports innovative projects where UK is well placed to take a global lead. Successful bids for Rounds 1 and 2 projected to secure or create 18,000 jobs. Additional £120m to run two further rounds secured. Competition Brief for Rounds 3 and 4 published and Guidance Notes now available. Launched the reformed Manufacturing Advisory Service in January 2012. High Value Manufacturing Catapult, opened in October 2011 16 new university-based Centres for Innovative Manufacturing, to support emerging science in areas of strategic opportunity for manufacturing and address the long-term manufacturing research challenges. March announcement of 13 further successful bids to open University Technical Colleges, bringing total number of UTCs to 45. Foresight Manufacturing Project: 2 year project investigating future of manufacturing to 2050, reporting Autumn 2013. Annual Investment Allowance Temporary – 2 year – tenfold increase in threshold to £250,000 Further 1% cut in Corporation Tax to 20% in 2015 R&D tax credit rate for large company R&D increased to 10% Recent actions

8. Innovation: Support for Manufacturing High Value Manufacturing Catapult Centre Strathclyde Advanced Forming Research Centre Coventry Manufacturing Technology Centre Rotherham Advanced Manufacturing Research Centre Nuclear Advanced Manufacturing Research Centre Wilton /Sedgefield Centre for Process Innovation Bristol National Composites Centre Coventry Warwick Manufacturing Group Locations Materials Manufacturing process technologies/techniques Welding/forming Industrial biotechnology Sectors Capabilities High Value Manufacturing a key Competency for TSB – underpins a range of sectors TSB Portfolio >£50m, EPSRC Portfolio >£58m UK Strengths: Aero. Auto. Electronics, Life Sciences, MEMS, Satellites The Future – Customised Manufacturing, Plastic Electronics, Advanced Materials (e.g. graphene) Further investment of £600m in Science and Innovation announced in Autumn Statement 2012 R&D Tax Credit: The largest source of Government support for business R&D:  £1.1 billion (claimed on £10.9 billion of business R&D) by 10,290 businesses in 2010/11  Government increased the SME rate of relief to 200% in 2011 and to 225% in 2012. Large company rate is 130%.

9. Skills Apprenticeships University Technical Colleges Promoting STEM skills Apprenticeship starts 2010/11 Apprenticeships are at the centre of our workplace training offer, delivering job-related, transferable skills. Focussing on improving quality of apprenticeships as well as quantity, including developing more higher level apprenticeships. Support from key companies including Airbus, Shepherd Offshore and GM Vauxhall, who all stand to benefit from world class, nationally accredited training delivered in the workplace. Apprenticeship starts in manufacturing and engineering in 2010/11 totalled 48,970 – up almost 30% on 2009/10 Provisional figures for 2011/12 show there 57,000 Apprenticeship starts in manufacturing and engineering. Strategy to promote and improve teaching of STEM skills in secondary and higher level education, including through STEMNET co-ordinating a range of activities between business and schools. 45 UTC’s now announced. On course to exceed commitment to establish 24 UTCs by 2014. 5 already open, 27 due to open over September 2013 and 2014. Creates opportunities for more than 28,000 young people (14-19 year olds) to train as engineers, scientists and technicians of the future. 38 Universities and over 400 employers now involved in UTCs. Engineering Skills shortage: Government working with industry to shore up the engineering skills pipeline. British employers currently face a workforce with insufficient skills which are critical to many industries of the future and to our international competitiveness. Project Team to report Summer 2013.

10. Image of Manufacturing A package of measures to help change perceptions of manufacturing. Made in Britain exhibitions focussing on success, capability and growth Make it in Great Britain Campaign an exhibition of the best of innovative British manufacturing held at the Science Museum summer 2012 See Inside Manufacturing initiative that encourages young people to consider a career in manufacturing. Queen Elizabeth Prize for Engineering launched 17 November 2011 First winners £1m bi-annual prize announced in March 2013

11. Exports UK exporters account for 70% of business R&D. Exporting forms a core strand of the Government’s Plan for Growth The Government’s ambitions: Doubling UK exports to £1 trillion a year by 2020; Getting 100,000 more UK companies exporting by 2020; Getting one in four UK companies to export (European average) rather than one in five at present; and Maintaining the UK’s position as the most favoured location in Europe for inward investment and doubling the UK’s stock of FDI to £1 trillion by 2020 UKTI will seek to double its client base to 50,000 over the next three years. SMEs key to improving export performance. National Export Challenge to get up to a further 100,000 SMEs to export. Initiatives include: Open to Export web resource, launched October 29, will provide SMEs with professional export advice allowing peer to peer advice and information sharing ‘How to’ export guide for intermediaries to share with clients London 2012 Olympics & Paralympics widely regarded as the ‘greatest’ Games ever, and showcased Britain at its very best to the world.

12. Next Steps Continuing to engage with whole range of sectors through our work on Industrial Strategy - development of sector strategies including for automotive, agri-tech, and renewable energy. Local Enterprise Partnerships and Enterprise Zones grasping local opportunities, with advanced manufacturing providing opportunities for local companies.