Labour’s Industrial Strategy: What does their future vision mean for manufacturers?

The new Labour government that came to power at the start of July heralded a new industrial strategy for the UK focussed on growing the economy. As the Head of Irwin Mitchell’s Manufacturing group, I’ve taken a close look at its four missions and examined what it could means for businesses operating in the sector.

1. Delivering Clean Power by 2030

The strategy’s first mission will be to deliver a fossil fuel free electricity system by 2030. 

Labour asserts that this initiative will not only save UK households £93 billion over the next decade but also position the UK as a net exporter of clean energy worldwide. The driving force behind this mission is the urgent need to address climate change, while the potential economic benefits for the manufacturing sector include increased demand, job opportunities, and technological advancements.

Economic spillovers should create a positive feedback loop. As manufacturing grows, it stimulates related industries (e.g., logistics, services, technology). Manufacturers benefit from a thriving ecosystem, access to skilled labour, and collaborative innovation. Quite simply, a robust manufacturing sector fuels economic prosperity.

Huge opportunities – but also risks…

This seismic shift towards delivering clean power by 2030 opens doors for manufacturing sectors involved in renewable energy technologies and electric vehicles (EV). For example, demand for solar panels will surge and manufacturers can expand their product lines to include photovoltaic cells, inverters, and mounting systems. Wind energy presents another growth area with manufacturing components such as turbine blades, gearboxes, and tower structures offer lucrative opportunities. 

Clean power requires efficient storage too and manufacturers have the opportunity to innovate in battery technology, grid-scale storage, and home energy solutions. 

The EV industry also relies on advanced batteries, and it also necessitates infrastructure overhaul. Grid upgrades, charging stations, and smart grids require substantial investment. Manufacturers can actively participate in building this critical infrastructure.

By investing in clean power, the manufacturing industry contributes to environmental sustainability while benefiting from increased demand. This transition aligns with global trends toward cleaner energy sources, positioning manufacturers at the forefront of innovation and growth.

The flip side of this is of course the impact on the oil and gas sector – can the government ensure the transition does not adversely impact on businesses, jobs and communities, particularly in Scotland, and make sure the “stars are aligned” so that these areas affected directly benefit from the opportunities that come with clean power?  One to keep an eye on…

2. Harnessing Data for the Public Good

The second element of the strategy emphasises using data and AI to improve public services and productivity. 

The government says that by harnessing data for the public good, leveraging data analysis and artificial intelligence, we can shape these technologies responsibly - enhancing productivity, public services, and quality of life. 

For manufacturing, this means adopting smart manufacturing practices, predictive maintenance, and data-driven supply chain management. By leveraging data effectively, manufacturers can enhance efficiency, reduce waste, and optimise production processes.

Data-driven decision-making enables manufacturers to streamline operations, minimise downtime, and improve product quality. It also facilitates customisation and personalisation; meeting consumer demands more effectively. In an increasingly competitive landscape, data-driven insights are crucial for staying agile and responsive.

The UK has had productivity issues for many years – this could be the “silver bullet”.

3. Caring for the future

This mission focuses on ensuring high-quality care for all, especially the aging population. Although the opportunities for manufacturers here might be less obvious, by capitalising on the opportunities presented by the unified health system and world-leading research base, the UK can become a global leader in using advanced techniques for preventative healthcare and early diagnostics. In other words, manufacturers can contribute by developing cutting-edge technologies and solutions for the care sector.  Given the current state of the care sector and the impact this has on the NHS, this is arguably the biggest opportunity of all.

4. Building a Resilient Economy

Labour’s fourth and final mission is to strengthen supply chain resilience in key sectors. 

This is a high priority for a number of reasons. The government point out that a lack of resilience can impact the entire economy, adding that more resilient supply chains presents a growth opportunity as they can help the economy respond quickly to capitalise on new opportunities.

The UK government has set out a number of initiatives in this area, such as setting up a supply chain taskforce to review needs across critical sectors. It adds that sometimes solutions will be targeted at specific supply chains: intervening to ease particular pinch points, removing barriers to supply, enabling sufficient stockpiling/storage capacity and diversifying supply.

Action

There are steps manufacturers can take in this area such as diversifying suppliers, reducing reliance on single sources, and enhancing local production capabilities.

Risk assessment and mapping is part of this and identifying critical supply chain nodes and assessing their vulnerability to risks (e.g., geopolitical, natural disasters, or pandemics), is more important than ever – the Suez canal blockage is not that long ago, and terrorist and pirate activity in that area has not gone away.

If not already doing so, building buffer stocks, improving inventory management, fostering strong relationships with suppliers, and developing contingency plans for various disruptions, are just a few examples of what businesses in the sector should be considering.

Remember, resilience is an ongoing effort. Manufacturers should continuously adapt and evolve their strategies to navigate dynamic challenges.

Conclusion

Labour promises a clear and consistent policy framework, providing stability for businesses. 

Manufacturers rely on predictable policies to make long-term investment decisions. By ensuring consistency, this strategy should foster confidence among manufacturers, encouraging them to invest in research, development, and expansion.

Manufacturers need certainty to plan. Stable policies enable them to allocate resources efficiently, develop new products, and explore emerging markets. Trust in government policies encourages sustained investment, driving manufacturing growth and competitiveness.

In summary, Labour’s industrial strategy offers a welcome roadmap for manufacturing to thrive in a changing landscape, emphasising sustainability, data utilisation, resilience, economic interconnectedness, and policy stability.  How the strategy is implemented is now the key.