With the Fourth Industrial Revolution set to inject £455bn into the UK manufacturing sector, Bidwells looks at the implications, as well as the technologies and locations set to lead the way.
The Fourth Industrial Revolution, also called Industry 4.0, was first conceived in Germany in 2011 and describes the computerisation of manufacturing. This is a core element of the Fourth Industrial Revolution as described by the World Economic Forum, melding technologies across physical, digital and biological disciplines.
Speaking at the World Economic Forum meeting in Davos in January 2015, German Chancellor Angela Merkel called Industry 4.0 the way we “deal quickly with the fusion of the online world and the world of industrial production.”
In the manufacturing sector, the emerging technologies leading the way are known as Industrial Digital Technologies (IDT’s), ranging from automated warehouses and robotic assembly to self-driving cars and intelligent robots.
Advances in Big Data analytics mean companies have real-time information on production across supply chains, enhancing efficiency and delivering greater responsiveness to business trends. In smart factories, machinery, storage systems and production are capable of carrying out complex tasks, exchanging information and giving instructions to each other, without the need for human involvement. Furthermore, developments in 3-D printing have the potential to drastically reduce research and development costs, and could even eliminate the need for production facilities.
As these advances continue, transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth.
Britain at the Forefront of New Technologies
Industry 4.0 is clearly a revolution in the making, with wide-scale implications for businesses, consumers and workers. On the supply side, many industries are already seeing the introduction of new technologies, which are furthering new ways of serving requirements and disrupting long-standing industry value chains.
An independent review of industrial digitisation in 2017, called Made Smarter, revealed that Britain’s manufacturing sector could unlock hundreds of billions of pounds over the next ten years through IDT’s, create 175,000 highly skilled, better-paid jobs, and reduce CO2 emissions by 4.5%, potentially putting the nation at the forefront of new technologies.
The fastest-growing technologies leading the Industry 4.0 movement in the UK include:
- Additive manufacturing (3-D printing)
- Virtual and augmented reality
- AI and machine learning
- Power grids and wind farms
The Uk’s manufacturing sector already employs around 71 robots per 10,000 employees, and robotics is seen by many experts as the most crucial aspect of future digital technology. Robotics is expected to become a $29bn industry this year, with the value of the collaborative robotics industry expected to grow to $1bn by 2020.
The UK Aerospace industry is the largest in Europe, second only to the US, and is pushing boundaries for the future of travel, even amid Brexit landscape shifts. Data released by the ADS Group shows the export-led industry grew from £1.9bn in 2015 to £31.1bn in 2016, employs 120,000 people, and indirectly supports a further 118,000 jobs. Europe’s aerospace cluster is found in the south-west of England, a powerhouse of 15 of the largest aerospace organisations.
The UK is home to the strongest AI and machine learning market in Europe, with over 200 SMEs in the field, compared to 81 in Germany and 50 in Nordic countries. The industry has the potential to bring £198.7bn to the UK economy by 2027. With a thriving ecosystem of researchers, developers and investors, the UK has a comparative advantage in developing AI technologies. By 2020, 85% of businesses are expected to have invested in artificial intelligence.
The UK is investing significantly in key areas of clean energy infrastructure, such as solar parks and wind farms, smart grids, energy efficiency and battery storage projects. But, according to a report by Bloomberg New Energy Finance, energy investments in 2018 are expected to slow, as they took a hit in 2017 – with investments falling 56% due to policy changes. Worldwide spending climbed 3% to £242.4bn, proving the possibility for sustainable energy to become a major IDT, not only globally, but also for Britain.
Cities Unlocking the Potential of Industry 4.0
Several reports have spotlighted Golden Triangle cities as areas spurring tech growth and innovation, and this year the UK Powerhouse report by Irwin Mitchell found that Cambridge, Oxford, and Milton Keynes are the fastest growing cities in 2018 of all British cities.
The UK Powerhouse report highlighted Cambridge as the top city to lead economic growth, most notably recognised for its prestigious academic setting and Cambridge Cluster. The Cambridge Cluster, or Silicon Fen, is a well-known vibrant science and tech hub and hotspot for businesses focused on electronics, software and biotechnology.
The area has an employment base largely comprised of high-skilled workers, and the 1,500+ companies in tech and life sciences contribute to an annual revenue of £14bn. Cambridge’s tech hub has attracted more than £153m in digital tech investments and provided over 30,000 digital tech jobs to the UK market, making it a leading area for Industry 4.0 innovation and employment.
Bidwells’ research into the Biopharma hubs in Cambridge and Oxford also revealed 600 companies operating in these locations, which are set to be huge contributors to the future of medicine and technology, a key area for innovation for Industry 4.0. Companies ranged from multinationals to startups, with a combined market cap of £5.7bn.
Milton Keynes has unexpectedly become a household name and one of the UK’s top smart cities. It’s fast become an example what a deep commitment to the innovations and installations of smart technology in a city looks like. Milton Keynes is a leading developer of Industry 4.0 technology, attracting investors as they recognise the region as one of the fastest growing tech hubs. And, with the region’s recent investment from CityFibre, the town is on track to be Britain’s future IoT leader.
The Cambridge-Milton Keynes-Oxford expressway and the new Varsity Rail Line have the potential to magnify economic growth in the Golden Triangle region as improved infrastructure, reducing commuting times to support business growth, while also boosting the regions’ logistics connectivity.
industry 4.0 in evidence
Bidwells’ Partner and Head of the Industrial and Logistics Team, Patrick Stanton, said“our region is at the forefront of Industry 4.0. Across the manufacturing sector occupiers clearly see opportunities for cost savings – and automated technologies obviously mean less manual labour – but our region demonstrates the increased demand for more high-tech skills.”
Stanton adds that software advances that aid packing and distribution are already having an impact.“Occupiers are seeing the possibilities of employing automated technology to enable them to store goods and products at a greater height than ever before,” he said. “There is a view in the sector that ‘you don’t pay for height’ because if you can build an industrial shed higher and create more usable space without increasing the overall floorspace.”
“There is no doubt that if you get the automation right, then there are savings to be had. The food industry is embracing automation fastest as they are seeking out a digital audit trail for their supply chains.”
One example is The Yearsley Group, who have recently started construction on a fully-automated 35m high warehouse at Gateway, Peterborough costing £65 million. Stanton, who sold the 20-acre site to Yearsley said: “A fully automated system takes pallets from a high ceiling area to the floor level and distributes them from there. Building size and design will change over time as automation becomes more common and this will mean more storage capacity.”
Stanton points to what is speculated to be the biggest industrial shed development in the sector, the 22m high Altitude development in Milton Keynes: ”This is a clear sign of the direction the market is going in,” he said.
Stanton notes “Industry 4.0 is impacting the industrial property sector, but how it will evolve is still difficult to predict. There is no doubt that automation is going to increase, but there are no standard models for how occupiers are adapting to these Industry 4.0 trends. Everyone has their own unique supply chain.”
A sufficient supply of industrial space will be a key player in the success of manufacturing, assembling, delivering and storing these IDT’s, not to mention the thousands of employees who will be drawn to, and employed by, the fast-moving sector.
The potential is clear to see in current market trends. In 2017, industrial and commercial property in Oxford, Cambridge and Milton Keynes boomed despite Brexit fears. Industrial rents continued strong growth across the Golden Triangle in the last six months of 2017, and Cambridgeshire led the way with growth of 13.6% in 2017.