Industry set to increase investment in AI

25 November, 2024

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.

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%), improved productivity (61%), and automation of routine tasks (46%). 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. Of those more than nine in ten (93%) are using it to optimise energy consumption, almost two thirds (64%) to reduce waste and emissions and, more than half (57%) to improve resource efficiency. Looking forward, companies should see further gains in these areas almost three quarters of companies (75%) are planning to increase their AI investments in the coming year.

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.”

Srinath Jonnalagadda, VP of Industry Strategy for Design & Manufacturing at Autodesk commented: “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.”

Despite increased adoption, only 16% of companies claim to be knowledgeable about AI’s potential uses and the lack of understanding and confidence in AI’s applications means only a third (36%) of companies are using it in their manufacturing operations.

The report also shows large companies are more than twice as likely as SMEs to be applying AI (71% and 28% respectively), with barriers to adoption including 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.

Furthermore, 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%) operate them with almost a third (29%) not considering using them and only four in ten (38%) 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% of the world’s robots in manufacturing compared to 1.2% in France and 1.6% in Italy, both of whom have similar size industrial bases (1).

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 (2). However, given the extent of barriers that remain for SMEs in particular 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.

In addition, Government could 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 survey of 151 companies was conducted between in August 2024.

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