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Manufacturing industry at crossroads in AI adoption
Report warns that Britain’s manufacturers are at risk of missing out on innovation and productivity gains due to a lack of confidence in digital technologies and AI
One of the key dynamics in the manufacturing industry is the increasing take-up of artificial intelligence (AI), yet even though two-thirds of British companies are using it, only a third are using AI in manufacturing processes, according to a report from Make UK.
The Future factories powered by AI study from the trade association representing UK manufacturing was carried out in August 2024 in collaboration with design software giant Autodesk, and alerted the industry that a lack of confidence in digital technologies and AI means they are at risk of missing out on innovation and productivity gains. It also proposes how government initiatives and regulation can support the sector’s adoption of new technologies.
Fundamentally, the report showed manufacturers were using AI tools widely across their business, in particular to manage energy use and reduce waste. Yet, despite increased adoption, only 16% claim to be knowledgeable about AI’s potential uses. The lack of understanding and confidence in AI’s applications, warned Make UK, meant only a third (36%) of companies are using it in their manufacturing operations, with significant implications for the UK’s efforts to improve productivity.
AI was found to be increasingly deployed across multiple areas of manufacturing, from predictive maintenance to supply chain optimisation, and the biggest benefits manufacturers cited were increased efficiency (69%), improved productivity (61%) and automation of routine tasks (46%). These benefits show the importance of lowering the barrier to entry for these technologies and the untapped potential for small manufacturers.
While adoption of AI across overall business functions is increasing, the report shows the use of other digital tools, such as robotics, remained “disappointingly” low. Less than a fifth of companies (16%) operate them, with almost a third (29%) not considering using them and only four in 10 (38%) considering using them.
The UK is positioned 24th in the global rankings for robotics use, at 111 robots per 10,000 employees. In addition, the UK uses just 0.5% of the world’s robots in manufacturing, compared with 1.2% in France and 1.6% in Italy, both of whom have similar size industrial bases.
Large companies were found to be more than twice as likely as small and medium-sized enterprises (SMEs) to be applying AI (71% and 28% respectively), with smaller companies feeling resigned to slower AI integration. Barriers to adoption include a lack of knowledge of how to apply AI, and limited access to technical and digital skills. Consequently, the report highlighted how lower adoption rates among SMEs was preventing them from realising the benefits of increased profits seen by almost a quarter of companies and an ability to take on further work reported by almost a third.
Read more about AI in manufacturing
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In a call to action, Make UK stressed that given the extent of barriers that remain for SMEs in particular, there needs to be greater efforts by industry itself to overcome awareness and cultural challenges in organisations by sharing peer-to-peer learning and best practice.
It also suggested that government could take additional specific measures, including extending the R&D tax relief to cover investment in capital equipment and ensure that the extended Made Smarter programme – designed to help SME manufacturers adopt technology and digital skills – is able to deliver across all regions.
“AI and automation are driving dramatic change in speeding-up manufacturing processes and elsewhere in companies,” said Nina Gryf, digitalisation lead at Make UK. “Their potential to drive economic growth and reshape industries is becoming increasingly clear, and the manufacturing sector and its factories of the future have a central role to play.
“However, while the uptake of such technologies is increasing, the UK needs a step change in the use of automation otherwise it risks missing out on vital transformative productivity gains.”
“Taking advantage of new technologies isn’t a one-off investment and the silver bullet for change,” said Srinath Jonnalagadda, vice-president of industry strategy for design and manufacturing at Autodesk. “It demands a shift in mindset and an iterative approach over time, especially in the journey towards future, digital factories.
“A continued and concerted effort will be needed to achieve the industry transformation and workforce with the skills and capacity required to take advantage of new technology, allowing UK industry to emerge as a global leader in AI-driven innovation, setting the new standard for manufacturing excellence.”
