Ian Funnell, Chief Executive of ABB UK and North West Chair of the CBI, on the need for UK manufacturing to be more automated.
How does ABB help companies on their automation journey?
We are experts in electrification, industrial automation and robotics, and look at digitisation across every sphere of business. Most companies we deal with are taking those first small steps in automation and that’s the right approach. You want to take steps that are sensible, pragmatic, cost-effective and low risk. You don’t want to suddenly take one giant leap and pay the consequences because your business isn’t ready for it. What we find is that once a company has taken that first step it never goes back. It is bitten by the automation bug and wants to know what else it can do.
How do you dispel the myths around automation in terms of cost, complication and displacing jobs?
It comes down to awareness. The more companies realise how automation is transforming the world of business, the more we can dispel them. I’ll give you a perfect example. I recently visited a local blinds company where every individual cell of the manufacturing process has now been automated. The impact on that business has been phenomenal. It has increased its productivity by at least 20%, profits have doubled, and it has had to take on more staff to cope with demand. It has successfully taken that first step on the automation ladder.
But a lot of SMEs are still very sceptical about automation, and one of the things that holds a lot of them back is the ‘make do and mend’ culture. As a nation we are one of the most under-automated countries in western Europe and we really need to challenge companies about the art of the possible.
How much can ABB realistically do on its own to change perceptions?
Getting the message out is extremely difficult and challenging. But it cannot just be up to one company like us, it has to be driven by business groups and government too. The key is to convey a consistent and coordinated message so that companies are attending the right conferences and exhibitions where they can learn about the opportunities.
Isn’t this precisely what the Made Smarter initiative is trying to achieve?
Yes, its aim is to provide a vehicle to help UK manufacturing become more productive. But we must not rest on our laurels. It is up to us as business to continue to persuade or educate government of the benefits of this agenda to ensure we continue on the journey. If we do not do this what else is there? How else can we get UK manufacturing to become more productive? While it is early days for the north-west pilot it is already delivering tangible help to SMEs and this needs to be widened to other areas.
Is automation therefore the answer to the UK productivity puzzle?
Yes, but the technology itself is only one, albeit sizeable, part. The other pieces of the jigsaw are access to finance, lack of knowledge, the ‘make do and mend’ culture, and skills. If you take finance you would be amazed at how many companies still struggle to even pull together basic business plans. And skills training in the UK remains a huge issue because it is so fragmented. In the engineering sector alone there are more than 600 organisations with a role. Some are excellent at what they do, so why cannot we take best practice and excellence and extend that? At the moment there is often a huge amount of effort going into leveraging nothing, there is no framework underpinning it.
How will Brexit impact on productivity?
In the post-Brexit landscape, whatever that looks like, frictionless trade is only a good thing as long as you are competitive at your end of the pipe. If you are not, then business will go to the end of the pipe which is more competitive.
The productivity puzzle has only been exacerbated by Brexit with industrial investment falling significantly as everyone plays a ‘wait and see’ game. Meantime the productivity gap between the UK and our major competitors only further increases.
What we are finding right now is that companies are making the minimum investment they have to, taking as small steps as they possibly can. If you export, why commit to something when you don’t know what kind of trade deals are going to exist? So whatever the Brexit outcome, increasing productivity is going to become more important to maintain a competitive manufacturing sector.
What core skills do employers need and how can business education help?
The core skills we need are resilience, leadership, creativity, and teamwork. In this regard the relationship between business and education is extremely important. Business needs to be conveying to the education sector what it needs and wants from the education system. One initiative I like is the idea of putting experienced business people back into the education system to help students understand how business works.
Finally, what do you think about the concept of a regional industrial strategy?
Devolved government is a real positive for driving local innovation. If you have autonomy within a region, and you can support that with an industrial strategy, then monetise that innovation. As a business we are also seeing more localisation requirements, building factories where the market demand is.
However I think a regional industrial strategy is only a good idea up to a point. Where it could be less helpful is if every region starts describing itself as a ‘centre of excellence’ in a particular sector. There must be coordination between the devolved regions so we don’t start to dilute the benefits. One good example is skills. We should have a national framework to allow talent to move across the country and not simply duplicate effort and constantly reinvent the wheel.