Midlands Manufacturing Resilience Report and Appendicies

Manufacturing Confidence Midlands Manufacturing Resilience Commission Dr. Clive Hickman FREng Contents With thanks to Lloyds Banking Group for providing sponsorship for this independent Report. Foreword by Andy Street, Mayor of the West Midlands 4 Preface by Sir John Peace, Chairman of the Midlands Engine 5 With special thanks to Executive Summary 7 Andy Street, Mayor of the West Midlands 1. Introduction and the Midlands’ Identity 10 Sir John Peace, Chair of the Midlands Engine 2. Productivity 14 3. Adapting to Change 26 4. Research and Development 29 5. Emerging Technologies 33 6. Digital Manufacturing 37 7. Skills 42 8. Support for Small and Medium Enterprises (SMEs) 53 9. The Supply Chain 58 10. Finance 65 Recommendations and Conclusion 69 Acknowledgments 73 2 3 Foreword to the Commission Preface The Midlands has a history of resilience. We are innovative and creative The Midlands spans a large geography of rural and urban areas; places by nature, with a relationship to manufacturing like no other region in the with strong manufacturing bases and others more reliant on the service country, or for that matter, the world. A relationship of which, I for one, and visitor economy sectors. Our population and places are diverse. It is am very proud. this great diversity that is a strength of the Midlands. In my role I have more opportunity than most to visit our towns, our The Midlands Engine Partnership brings voice and vision to the factories, our universities and even our Catapult Centres. This allows Midlands, ensuring that our collective needs are heard. Through the me to meet the very people who drive our economy. The engineers, the work of the Midlands Engine, partners come together to collaborate scientists, the designers and the technicians who, over many generations, and champion both their own and our shared work - bringing collective have built our reputation as the ‘workshop of the world’. strength to the Midlands. Yet, in recent decades, we have fallen behind our competitors in terms of The Midlands’ first Independent Economic Review (IER) published productivity, skills and well-paid, sustainable jobs. earlier this year by our Observatory highlighted the importance of the manufacturing sector to our regional economy. That is why I asked Dr Clive Hickman, with his knowledge, experience, and networks, to create a Commission to take a fresh look at our This Commission is therefore an important route through which to competencies. I asked him to provide recommendations that would influence beneficial change for our region, by helping the Midlands better equip us to face the challenges of global competition, the overcome barriers to growth in the manufacturing sector. transition to net zero, and a changing technological landscape with a renewed confidence and greater, lasting resilience. I would like to congratulate all involved in the important work of the Commission, in particular Dr Clive Hickman, who in his role as Chair was The concept of the innovation region has strong resonance with our able to bring his expertise on our regional economy to bear, and has ambition for the Midlands. This is exemplified by programmes such delivered a strong set of recommendations to improve the resilience of as the Speed to Scale initiative which, linked with our proposals for a our manufacturing sector. gigafactory, will support our drive for manufacturing resilience. This report highlights the need for ongoing support and a co-ordinated, So I applaud the work of the Commission, and I am grateful for everyone, partnership vision to secure the future of the sector. It references many of particularly Clive, who has played a role in completing this urgent task. the key barriers to growth that the Midlands Engine is currently working on – business leadership skills, productivity, and embracing digital and I commend this Report to our politicians, our academics, our businesses, new technologies. and most crucially, the residents of the Midlands, on whom the recovery depends! But the report also highlights the opportunity for the sector in our region – the opportunity to rebrand the Midlands as the Innovation Region, and Andy Street to become truly world-leading in net zero, digital manufacturing and Mayor of the West Midlands medical devices. The Midlands Engine will champion this vision and support the well considered and measured interventions proposed in the report. Sir John Peace Chairman, Midlands Engine 4 5 Dr Clive Hickman Chair, Midlands Manufacturing Executive Summary Resilience Commission Manufacturing as a sector has been tested by the pandemic – whether the vulnerability of our supply chains or the need to transform our production lines in timescales never before imagined or required. Andy Street, Mayor of the West Midlands, and I, agreed we needed to build ‘resilience’ into the system. Not least to prepare us against future shocks, but to start to rebuild our global reputation as a centre for manufacturing excellence. This Commission seeks to build this resilience. The Midlands Manufacturing Resilience Commission, or M2R as it has become known, gathered evidence from a series of roundtables, surveys and other contributions from senior representatives from industry, academia and other regional bodies, including the West Midlands Combined Authority, the Midlands Engine, the CBI, and financial institutions, such as Lloyds Bank. This Report is a consolidation of those discussions, with a series of independently authored chapters focusing on the main themes, from productivity to emerging technologies. Our findings identified that: • Productivity in the Midlands is amongst the lowest in the UK, whilst at the same time the UK lags behind the world’s leaders in productivity. • Though we have the ability to adapt to change and respond to the challenges we are facing, we lack the confidence, belief and organisational leadership to respond. • There is fragmented support for manufacturing across the region, with too many disparate intervention mechanisms that are either too obscure, or too complex, to be accessed by many of our small and medium sized enterprises. • With a few notable exceptions, we have failed to embrace sufficiently the advanced and emerging technologies which have the potential to increase productivity and growth, creating sustainable, high quality, well paid jobs. • Our business leaders, particularly in the SME community, are too busy working ‘in the business’ to work ‘on the business’; we have not provided the leadership development opportunities or created the bandwidth to address this concern. • We have not developed or retained the skills which allow us to become world class. In particular, there is insufficient emphasis on upskilling and reskilling to enable advanced technologies to be adopted. 6 7 These findings inspired the Commission to develop But to achieve all of this, to rebuild our manufacturing • Create a productivity growth fund to support SMEs a shared vision of the future of manufacturing in the sector, and rebrand the Midlands as the innovation to adopt and deploy advanced manufacturing Midlands with the following elements: region, we must act now and at pace to implement technologies based on the ‘Made Smarter’ initiative the recommendations which have emerged from this • World class academic research with dynamic • Modify the Apprenticeship Levy so that it can Commission: RTOs (Research and Technology Organisations) be used to upskill and reskill workers who have and to translate that research into innovative • The Government must match private sector been displaced by advanced manufacturing products and processes investment in the Midlands at the same levels as technologies it does for the rest of the UK, supporting initiatives • An effective and growing medium-sized tier of • Repurpose the National Retraining Scheme and such as the Speed to Scale programme manufacturing businesses direct funding to support the redeployment of • Address the fragmented support for workers who have been made redundant during • Confident and agile SMEs, with a strong and manufacturing across the Midlands: the pandemic supportive ecosystem • Have a unifying agenda and consistent, • Support Midlands’ universities to create • Greater access to finance and support to enable coordinated intervention leadership development programmes on a SMEs to grow modular basis that SME leaders can ‘dip into and • Have a balanced and enhanced package of • An attractive environment for strong OEMs and out of’ to suit their needs and capacity support including capital allowances, R&D Primes credits, access to growth capital and patient • Introduce the concept of ‘Total Value UK’ to • Co-ordinated and not ad-hoc interventions capital recognise the value of localisation rather than the traditional focus solely on cost • Resilience across the sectors where we have a • Provide financial protection for SMEs to take on strong tradition: aerospace, automotive, ceramics, bigger challenges and to move from start-up to • Task the High Value Manufacturing Catapult, in construction, food production and processing, and scale-up through an improved growth capital collaboration with our university sector, to develop textiles programme: a Midlands Equity Fund through a portal for key supply chain information and map the Midlands Engine, linked with a German the Midlands supply chain • A focus on areas where we can become world style Sparkassen Savings Group environment This Report is an important milestone in the Midlands class including net zero,

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