Advanced Manufacturing in the Industrial Strategy

Investment, digitisation and innovation

Innovation is at the heart of growth and the UK manufacturing sector has had this at its core since the Industrial Revolution, enabling the UK to punch above its weight on the global stage. Manufacturers and the continued drive to innovate, are key to achieving sustained growth in the UK and therefore, the success of the Industrial Strategy and future prosperity of the nation.

It is encouraging that the Industrial Strategy identifies advanced manufacturing, specifically as one of the key sectors for UK growth, as well as a number of other key sectors are dependent on the manufacturing sector; but unlike our M4M, and a sustained sector led campaign, it is disappointing that it doesn’t identify the need for a government minister whose sole remit it is to represent the manufacturing community, given its importance to the success of an industrial strategy. The M4M sees this as a fundamental foundation stone for growth in the sector and therefore of the successful delivery of the Industrial Strategy.

The government is clear that investment in research and development is a core theme in its strategy; but unlike the recommendations in the M4M, it didn’t commit to reviewing and improving the UK’s R&D tax credit schemes. This problem has not ‘gone away’. The latest Crowe Manufacturing Outlook Survey discovered that 21% of respondents had decided not to innovate and attributed this to the reduced value of the UK’s R&D tax credit schemes and the change in approach towards legitimate claims by HMRC.

Skills and education

People are core to the country’s manufacturing base and it is encouraging that the strategy puts people and skills as one of its key policy areas. This is echoed among the manufacturing community as the M4M is clear that the future longevity of the manufacturing sector requires investment in skills, particularly vocational training and STEM subjects among children and young people. Reflecting on the aging manufacturing workforce and the increasing difficulty companies face recruiting, it is fundamental to upskill people to ensure that today’s workers can pass the baton to the next generation that is skilled and ready to build into the future.

The M4M referred to the need to increase the value and esteem of a career in the sector and of course, a dedicated and respected minister would have achieved this. There is little that we can see, at present, that underpins the essential need to inspire, attract and retain young people to the sector; this must be addressed.

Supply chain strategy and security and Energy, decarbonisation, and the route to net zero

Successive Crowe and CBM surveys and the M4M, identified the need to have secure supply chains and competitive energy costs and our latest survey is no different.

It is extremely encouraging to see that the government are planning to bring forward a programme to support energy costs in the UK manufacturing sector and to seek to ‘equalise’ the adverse pricing of our energy compared to the EU and the rest of the world.

Likewise, action taken to protect UK steel production in Scunthorpe is laudable. Although it remains to be seen how the sustainability of this measure will play out. The transition of the Tata facility in South Wales from blast furnaces to electric arc technology will naturally present a ‘gap’ in UK production. This will need managing at a government level to prevent shortages, uncompetitive production led pricing and at worst, ‘dumping’ by competitors looking to manipulate the market to their advantage.

Introduction of The Carbon Boarder Adjustment Mechanism (CBAM) in the EU and the UK will look to level the playing field; but it is noted that the rollercoaster of US tariffs and the attendant ambiguity will continue to present uncertainty which is, to an extent, outside the control of Westminster.

Moreover, the M4M called for increased support for decarbonisation and also for the promotion of the availability of that support. To date, we have seen little progress in that regard though it is clearly noted as a need in the strategy. Surely this must become a priority.

Access to finance and funding

Additionally, the M4M recognised the need for investment to drive competitiveness and productivity in the sector and that this needed ‘pump priming’ in an uncertain commercial and geopolitical environment.

Likewise, in a global commercial environment, it is vital that the incentives and support afforded to UK based businesses are at least at the levels offered by global competitors. Sadly, we have yet to see this. Additionally, increased costs of employment, energy and raw materials has driven many global businesses to source abroad, rather than re-shore, which surely should be the drive for our country to drive decarbonisation on a global level, increase UK revenues and better afford, vital public services. There is clearly much more to do here.

Critically, our 2025 Manufacturing Outlook Report clearly indicated a continuing reluctance to invest and this shows that our call in the M4M for a national grant fund to support investment in reshoring, digital and advanced manufacturing methodology, has not been followed up on. We identified a number of schemes where funding could be redeployed. However to date, support has been restricted to a ‘postcode lottery’ and programmes that measure outcomes that are not indicative of long-term sustainable success.

While digitisation and AI has a place in the manufacturing sector, it will, over time, drive efficiency, innovation and improvement rather more than in the service sector, where it has a potential to make significant infrastructural inroads into activity, value add, employment and ultimately tax revenues. The chancellor (and therefore the PM) has ‘banked’ on economic growth to drive economic success and facilitate rebuilding our public services.

One year on from the Manifesto for manufacturing, the key messages remain completely relevant. We would urge the government and the Industrial Strategy Advisory Council to take another look at it and use it to deliver the Industrial strategy and economic success.