We’re living through a new industrial revolution – and according to a report from Barclays it should be seen as an opportunity not a threat, as embracing change could bring new jobs and profits to the UK.
The first industrial revolution was powered by steam, the second by electricity and the third – in the later 20th century – by electronics. Now a new wave of change is based on the internet and artificial intelligence: AI, robots and networked household appliances are changing the world around us at an exponential pace.
The concept entered the mainstream when the World Economic Forum at Davos chose the fourth industrial revolution (‘4IR’) as its theme for 2016.
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Sometimes, 4IR is regarded as a threat to jobs, in which autonomous, thinking robots will take jobs from humans – and potentially leave British manufacturers struggling to keep up with the rest of the world.
But leading economists and politicians agree that Britain must embrace 4IR, rising to meet its challenges. :
“The risk is not that we adopt new technologies that destroy jobs,” digital minister Matt Hancock told a group of MPs investigating 4IR last year. “The risk to jobs comes from not adopting new technologies.”
Real-world evidence
First-hand evidence of this comes from Mark Franckel, group chief executive of Coventry-based automotive and aerospace firm Arlington Industries, a client of Barclays. Robots have transformed the sector – and are becoming more flexible and versatile all the time.
But even though the robots “can now do more manual tasks”, Franckel says, his company is also now employing more humans. Greater capacity has led to more orders, and “with new technology and more customers we … have actually increased our headcount by 33% over the last three years”.
Automating labour-intensive processes “frees our employees to focus on the more complex” tasks, he adds, and “this has changed the way in which we recruit. Increasingly, we are looking for individuals in these higher-value positions of sophisticated assembly or engineering, while also accelerating the development and training of our existing workforce.”
Arlington is an example of what British business has to gain from these technologies – and Barclays suggests that others should follow its lead. There will be “significant financial and economic penalties”, the bank says, if British companies trail behind those of other advanced economies when it comes to investing in 4IR. The UK already lags behind other major manufacturing nations in terms of productivity – a sign of under-investment.
If investment drops in the next few years, British manufacturers could experience a 10% fall in turnover, according to scenario modelling carried out for Barclays. On the other hand, deeper and faster investment in 4IR could give UK manufacturing a boost of £100bn a year by 2026.
Speedy returns
A “quick and considerable” return on investment for an automated tank-cleaning system convinced Welsh soft drinks manufacturer and Barclays client Radnor Hills to embrace 4IR, says managing director William Watkins. Now the firm’s quality control system is entirely paperless and it’s “in a strong position to take advantage of 4IR”.
The second phase will enable the live collection of data. “We strongly believe that this will be the only way for us to remain competitive in the future,” says Watkins.
Surveyed for Barclays, other manufacturers who have already invested in 4IR technologies said they were seeing benefits. Some 51% said they had enjoyed improved productivity, while 45% said they had reduced their costs and 32% said new technologies allowed staff to use their time more productively.
Timely investment is key – and if British manufacturers embrace 4IR and invest in their future, says Barclays, they could lift growth across the sector by 15% within a decade.
Find out how Barclays Corporate Banking’s industry experts are supporting clients to achieve their ambitions at barclayscorporate.com
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