UK manufacturing focusing on innovation, says KPMG09 June 2015

UK manufacturing executives say that their strategic focus going forward is one that is innovation-led, supported by attractive UK corporation taxes like the Patent Box, according to the latest KPMG Global Manufacturing Outlook.

The report found that nearly half (48%) of UK manufacturers said that their company's strategic focus is on innovation and that only 2% felt that UK taxes are a challenge to their business in the next 12 to 24 months.

Half of UK respondents said that they plan to spend more than 6% of revenue on research and development and innovation over the next two years, an increase of 21% over the past two years.

With innovations like 3D printing changing manufacturing, product development cycles (from concept to commercialisation) have reduced from years down to months. However, KPMG said one to five years was the time horizon for an 'innovation road map' for 64% of UK manufacturers.

Stephen Cooper, head of manufacturing sector at KPMG UK, said: "UK manufacturers are keenly aware that innovation will be the key to future growth. They also know that timelines are shrinking -the lead time from concept to commercialisation is dropping dramatically for those manufacturers hoping to remain competitive in today's technology-driven business environment."

He added: The UK has always been viewed as a leader in manufacturing innovation and there are clear signs that this will continue to be the case. Encouraging tax rates, stable markets and growing investment in new technologies and advanced materials – such as graphene – continue to provide competitive advantages for UK manufacturers."

Cooper also warned that the tightening access to talent could limit UK manufacturers' ability to evolve, grow and adopt new technologies: "Whilst there is additional effort being made to increase the number of apprenticeships, which can only be good, more must be done to attract young people to become engineers. Ongoing retention within the manufacturing sector is ever more challenging whilst recruitment of other smart and innovative people, is necessary to drive forward the manufacturing models of tomorrow."

Ian Vallely

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