London set to benefit most from Industry 4.0 job shift, says report

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The increased use of 'Industry 4.0' technologies within UK factories will not have a significant impact on overall employment levels in the manufacturing sector, but will cause a significant swing towards higher skilled positions which will most likely be distributed in London, according to a new study.

The Go Fourth report by national law firm Irwin Mitchell and the Centre for Economic & Business Research (Cebr), examines the latest trends and impact on the manufacturing sector of new technologies such as fully autonomous robots, 3D printing and augmented reality.

These technologies, often referred to as the fourth wave of the Industrial Revolution, create 'Smart Factories' which offer many benefits including higher productivity, increased speed of production and improved product quality.

A common fear associated with Industry 4.0 is a loss of jobs it could cause, but according to the study, employment levels within the manufacturing sector will increase by 0.8% between now and 2021 as a result of the increased utilisation of Industry 4.0 technology.

However, it says that certain occupations will be hit harder and the impact of this will be felt to a greater extent in some areas of the UK.

The report forecasts that in the next four years, lower skill professions and administrative jobs will fall, whilst there will be a 12% increase in managers, directors and senior officials and a 7% rise for professional occupations.

The report reveals that manufacturers in the East Midlands, Northern Ireland and Yorkshire employ the highest percentage of at-risk occupation groups, while London and the South East employ the least.
In the South East, for example, only 5% of jobs are elementary occupations, for which employment is expected to decline by 10% by 2021, while the figure for Yorkshire and Humberside is 11%. In the East Midlands, 23% of jobs are process, plant and machine operatives, but in London only 9% of manufacturing workers are employed in this area.

These regional results suggest Industry 4.0 will generate a change in the distribution of manufacturing jobs within the country. Aggregate employment is not forecast to change significantly, and the job creation will occur in areas with more employment of managers and professional occupations, of which there are a higher proportion in London and the South East.

The report incorporated a YouGov study of senior decision makers in 300 UK manufacturing companies.

Key findings from the report are:

  • The majority of manufacturers are not familiar with the term Industry 4.0. Only one-in-three manufacturing companies classified themselves as being familiar with the term. The figure is even lower when analysing small businesses only.
  • The survey results find that '3D printing' and 'data' are among those terms, manufacturers are most familiar with.
  • Investment in Industry 4.0 technologies remains limited. Only 14% of manufacturers have invested in big data and/ or cloud solutions while 12% invested in 3D printing technologies.
  • There is a long list of reasons why companies are not investing in Industry 4.0 technologies. Around one-in-three firms believe that their business is too small to capitalise upon the benefits of Industry 4.0 with more than a quarter of firms indicating that their facilities are not suitable.
  • Industry 4.0 is believed to result in productivity gains. Over one third of companies believe that Industry 4.0 technologies will have a positive impact on overall productivity. Only 2% of manufacturers expect a negative impact on productivity.

Dorrien Peters, partner at Irwin Mitchell and head of the firm's manufacturing sector group, said:

"This report shows that in the UK, usage of and familiarity with Industry 4.0 technology is at a low level in the manufacturing sector; however it is growing, especially within the adoption of cloud solutions and big data analytics.

"This growth will provide productivity benefits but it appears that many manufacturing businesses in the UK are still concerned by the cost of investing in Industry 4.0 technology. Also, a number of businesses believe that their cyber security would be threatened by Industry 4.0.

"While one in three businesses surveyed believe that Industry 4.0 will reduce employment in the next decade, the report forecasts that on aggregate, employment will be stable until 2021. The distribution in terms of type of job and the location is set to change considerably and could have major repercussions for a large number of businesses."

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