The Future Factories powered by AI report examines the opportunities and challenges for UK manufacturers and proposes how Government initiatives and regulation can support the sectors adoption of new technologies.
It shows that manufacturers are using AI tools widely across their business, in particular to manage energy use and reduce waste. Yet, despite increased adoption, only 16 per cent claim to be ‘knowledgeable’ about AI’s potential uses.
The lack of understanding and confidence in AI’s applications means only a third (36 per cent) of companies are using it in their manufacturing operations, with Make UK warning of significant implications for the UK’s efforts to improve productivity.
The report also shows that large companies are more than twice as likely as SMEs to be applying AI (71 per cent compared to 28 per cent), with smaller companies feeling 'resigned' to slower AI integration.
Barriers to adoption include a lack of knowledge of how to apply AI and limited access to technical and digital skills. Consequently, lower adoption rates among SMEs are preventing them from realising the benefits of increased profits seen by almost a quarter of companies and, an ability to take on further work reported by almost a third.
While adoption of AI across overall business functions is increasing, the report shows the use of other digital tools, such as robotics, remains disappointingly low. Less than a fifth of companies (16 per cent) operate them, with almost a third (29 per cent) not considering using them and only four in ten (38 per cent) considering using them.
The UK is positioned 24th in the global rankings for robotics use, at 111 robots per 10,000 employees. The UK uses just 0.5 per cent of the world’s robots in manufacturing compared to 1.2 per cent in France and 1.6 per cent in Italy, both of whom have similar size industrial bases, according to the International Federation of Robotics Index (2023).
In a statement, Nina Gryf, Digitalisation Lead at Make UK, said: AI and automation are driving dramatic change in speeding up manufacturing processes and elsewhere in companies. Their potential to drive economic growth and reshape industries is becoming increasingly clear, and the manufacturing sector and its factories of the future have a central role to play.
“However, while the uptake of such technologies is increasing, the UK needs a step change in the use of automation otherwise it risks missing out on vital transformative productivity gains.”
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Srinath Jonnalagadda, VP of Industry Strategy for Design and Manufacturing at Autodesk, added: “Taking advantage of new technologies isn’t a one-off investment and the silver bullet for change. It demands a shift in mindset and an iterative approach over time, especially in the journey towards future, digital factories.
“A continued and concerted effort will be needed to achieve the industry transformation and workforce with the skills and capacity required to take advantage of new technology, allowing UK industry to emerge as a global leader in AI-driven innovation, setting the new standard for manufacturing excellence.”
AI is increasingly being deployed across multiple areas of manufacturing, from predictive maintenance to supply chain optimisation, with the biggest benefits manufacturers cited being increased efficiency (69 per cent), improved productivity (61 per cent), and automation of routine tasks (46 per cent). These benefits show the importance of lowering the barrier to entry for these technologies and the untapped potential for small manufacturers.
Furthermore, the report shows a quarter of companies using AI as part of their efforts to decarbonise, with 93 per cent using it to optimise energy consumption, almost two thirds (64 per cent) to reduce waste and emissions and, more than half (57 per cent) to improve resource efficiency. Looking forward, companies should see further gains in these areas; almost 74 per cent said that they are planning to increase their AI investments in the coming year.
According to Make UK, there have been welcome initiatives from Government including confirmation of the roll out of the Made Smarter programme nationwide and a doubling of the funding for the Alan Turing Institute. However, given the extent of barriers that remain for SMEs in particular, the company said that there needs to be greater efforts by Industry itself to overcome awareness and cultural challenges in organisations by sharing peer to peer learning and best practice.
Additionally, the report thus calls on Government to take additional specific measures including extending the R&D tax relief to cover investment in capital equipment and ensure that the extended Made Smarter programme is able to deliver across all regions.
The report, based on the survey of 151 companies conducted in August 2024, can be downloaded and read in full here.
