Government must boost support for manufacturers to invest in digital transformation in the upcoming Spending Round, an industry group has urged after finding that 80% of firms hope to increase digital adoption in the next two years.
Research conducted by Make UK and software specialist Infor revealed that for over two thirds of manufacturers, past investment in digital technologies has left them better able to cope with the current challenging economic conditions facing the sector.
Firms with the cash flow to continue adopting new technologies are performing best while those without adequate funds are being left behind with falling productivity and weaker resilience, the groups claim.
Four in five manufacturers are now planning to increase investment further over the next 24 months, with 45% said to be introducing new digital tools to detect equipment faults quickly and keep production at an optimum level.
However a third of companies say the biggest inhibitor to more rapid digital adoption – as well as maximising these investments – remains a lack of technical skills within their business.
In response, Make UK is urging government to protect digital support programmes in the coming Spending Round, including by expanding the Made Smarter and Help to Grow Digital initiatives which it says would help SMEs in particular develop digital skills and practices.
In addition, to unlock greater innovation and ideas, the group is calls on government to accelerate further private investment in research and development by expanding the R&D tax credit to include capital equipment within qualifying expenditure.
“Our economy is undergoing a profound digital transformation with the potential to transform our lives and economy, making it more productive, resilient and sustainable,” said Make UK’s director of policy Verity Davidge.
“Those countries that are better prepared for these changes will benefit the most, with the companies increasing their investment powering through the challenges that lie ahead with greater productivity, better skill levels and reduced emissions.
“The key now is for manufacturers to unlock their potential on digital adoption which will be vital if we want to invest and grow. In order to aid this process Government must protect vital support programmes which are key to enabling SMEs in particular along their digital journey.”
Further survey results included that digital investments have improved productivity for 40% of firms while 27% said it has brought better profitability and 31% felt that it has improved labour efficiency. In addition, 34% of respondents reported that adoption of digital technology has reduced emissions.