Experts welcome the UK’s £4.5bn advanced manufacturing plan

Industry leaders have welcomed the UK government’s strategic plans for the support of advanced manufacturing. Here’s some of the detail of the planned £4.5bn investment and incentive package, and how it's likely to benefit EMS companies and their customers.

Good news for UK manufacturers and their customers

The unveiling of the UK’s Advanced Manufacturing Plan has gained widespread support from industry leaders and organisations in the manufacturing sector. Bodies such as Make UK, The Society of Motor Manufacturers & Traders, and many others have all expressed optimism about the plan's potential to drive growth and innovation within the sector.

A new plan interrupts a long silence

For decades the UK lacked a strategic support plan that could help companies capitalise on new opportunities in the life science, green tech and automotive sectors.

In Autumn 2023, Stephen Phipson, the chief executive of Make UK spoke of the fundamental failure of successive UK governments to share their manufacturing vision for the country - and a costed strategy for achieving it:

A lack of a proper, planned, industrial strategy is the UK’s Achilles heel. Every other major economy, from Germany, to China, to the US, has a long-term national manufacturing plan, underlying the importance of an industrial base to the success of its wider economy.”

But now, things have changed.

What's in the UK's advanced manufacturing plan

In December 2023 the Department of Trade and Industry finally published the UK’s advanced manufacturing plan. It’s a concrete and costed 5 year strategy aimed at re/energising the nation's manufacturing capabilities and laying the foundation for long term growth.

The Advanced Manufacturing Plan outlines three main priorities for the government:

• Targeting investment in the future of manufacturing in the UK.
• Cooperating internationally to build supply chain resilience.
• Reducing costs and barriers to boost competitiveness.

Here are some of the highlights of the report:

1. Investment and funding

The plan allocates £4.5 billion to support strategic manufacturing sectors over five years from 2025. This funding is distributed among various key areas:

• Automotive: Over £2 billion to support the development of zero-emission vehicles, including battery technology.
• Aerospace: £975 million to advance energy-efficient and zero-carbon aircraft technology.
• Life sciences: "£520 million to enhance manufacturing capabilities in health emergencies and capitalize on the UK's R&D strengths."
• Green industries: "£960 million through the Green Industries Growth Accelerator to promote sectors like carbon capture and storage (CCUS), hydrogen, offshore wind and nuclear."

2. Enhancing international co-operation and supply chain resilience

The Advanced Manufacturing Plan emphasises strengthening supply chains through strategic improvements in domestic capabilities, international partnerships, and regulatory reform:

• Domestic upgrades and skills training: Modernising infrastructure with smart technologies across various industries, including semiconductor manufacturing. This is complemented by investment in training programmes aimed at upskilling the workforce in critical digital skills and advanced manufacturing techniques.
• Strategic international alliances: Establishing robust partnerships and negotiating trade agreements to secure a reliable supply of essential materials and components. These alliances are also focused on fostering innovation sharing and enhancing market access, particularly in emerging markets and sectors.
• Diversifying supply sources: Actively reducing dependence on single sources for critical materials by diversifying suppliers globally and exploring domestic sources of minerals such as lithium. This strategy is paired with enhancements in logistics and warehousing systems to help manage supply chain fluctuations more effectively across all industries.
• Sustainable practices and regulatory support: Promoting environmentally sustainable manufacturing processes across all sectors and streamlining regulatory frameworks to facilitate easier international cooperation. This includes adjusting regulations to speed up compliance processes and reduce bureaucratic overhead for UK manufacturers.

3. Regulatory and cost barriers

In a move to further enhance the competitiveness of the UK's manufacturing sector, the Advanced Manufacturing Plan addresses significant regulatory and financial barriers. These include:

• Streamlining regulatory processes: The plan aims to simplify complex regulatory frameworks that some feel stand in the way of manufacturing innovation and speed of delivery. By making it easier for businesses to comply, the government hopes to encourage more rapid development and deployment of new technologies.
• Cost reduction strategies: Efforts are being made to reduce the overhead costs associated with manufacturing in the UK. This includes initiatives such as tax reliefs, subsidies for technological upgrades, and financial support for sustainability improvements.
• Encouraging investments in automation and digital technologies: Financial incentives are being provided for manufacturers to invest in automation and digital technologies that can significantly cut long-term costs and improve production efficiency.
• Enhancing access to capital: Small and medium-sized enterprises (SMEs) are being given better access to funding through government-backed loans and grants, enabling them to invest in new tools and expand their operations without the heavy financial burden.
• Investment zones The UK's advanced manufacturing plan includes the creation of Investment Zones in the Midlands and elsewhere that offer financial incentives and regulatory support to catalyse growth clusters of manufacturing excellence.

Why the plan is good news for UK’s EMS customers

For companies who want to do business with UK-based EMS companies - the plan should bring confidence that there will be the right investment in infrastructure, people, supply chain flexibility and green energy to deliver projects faster and to the highest level of quality.

The investment promised is significant. The whole package is backed by a commitment of £4.5 billion in state funding to 2030, including £3 billion to support the transition to clean technologies in the automotive and aeronautics sector. What’s more, it aims to leverage £5 of private investment for every £1 of government funding.

The plan embraces global partners

There are reassuring commitments to work collaboratively in international markets to support innovation and ensure companies will have access to the raw materials and components they need. As the authors of the report state:

We must not be naïve and choose protectionism where it appears to suit us. Free and fair trade is an opportunity and creates resilience in our supply chains.”

A plan to support a greener, tech-driven future

Meanwhile, promised investment in infrastructure and digital transformation will position UK firms to help meet the global need for decarbonisation and the faster iteration of greener technology.

There is a strong push towards adopting and integrating clean and digital technologies within the manufacturing sector. This will ensure the UK remains one of the best places in the world to undertake cutting-edge research and scale new products to market."

The UK plan is a strong statement of intent to stay at the forefront of global, manufacturing innovation. And even though an election is looming, the opposition Labour party have signalled continued support for its objectives should it come to power.

With commitment and consensus around the importance of this sector, it’s a great time for customers to bring their complex projects to UK EMS companies, particularly those with a global reach and outlook.

Not since Harold Wilson promised to help Britain forge success through ‘the white heat of technology’ in 1963, has the UK had such a focus on proactive, industrial policy-making.