Innovation needs same support as export and skills, says survey

The government needs to approach innovation with the same long-term objectives as skills and exports for the future success of manufacturing, according to the findings of a new survey.

The survey, published by EEF, the manufacturers’ organisation and Vodafone UK, suggests that UK manufacturers are using innovation to deliver productivity improvements and export growth, but are held back by shortages of expertise, equipment and finance.

The EEF and Vodafone view funding for innovation support as “critical” and says it must be maintained in order for the UK’s manufacturers to remain competitive on the world stage.

“It’s essential that we create the right environment for continuous innovation in manufacturing which is the backbone of UK industry,” said Tim Hancock, Head of Manufacturing at Vodafone UK.

“The good news is that almost all manufacturers are innovating in one form or another and with a variety of business goals, but they are doing so with decreasing diversity. This seems to be down to an organisation’s size and access to resources which can impact the level of innovation that can be taken on without disrupting day-to-day operations.”

The organisations say the findings in the survey show that the UK’s manufacturers are highly ambitious and are investing heavily in innovation. However, it revealed that despite this, they are not always achieving the results they anticipate as a result of the challenging and resource-hungry nature of the R&D process.

“This matters for manufacturing, and it matters for the UK, because manufacturers are now more concerned about falling behind competitors,” explained Lee Hopley, Chief Economist at EEF.

“We’ve seen year after year that manufacturers want to do more and every additional pound invested in developing the products and services of tomorrow can help get the UK closer to its goal of have a more productive economy. This ambition should be matched by government to ensure the UK continues to compete on the global stage.”

The latest data shows UK Business Expenditure on R&D (BERD) is only 1.1 percent of GDP, while the OECD average is 1.6 percent and Germany is at 2.02 percent.

According to the report, the main barriers to innovation are persistent – namely speed to market and overcoming technical barriers. Manufacturers are taking action themselves to overcome these barriers, such as ensuring a high level of collaboration with customers, while Government support is also plays a key role in increasing the level of innovation. Schemes such as the R&D tax credit and Knowledge Transfer Partnerships are particularly valuable, used by almost half and 1 in 5 companies respectively.