The Manufacturing Manifesto

2 - We are losing our productive edge

Let us start with a story. When Isambard Kingdom Brunel’s father saw British soldiers returning from the Peninsula War with injured feet due to shoddy footwear suppliers, he resisted the urge to turn a blind eye. He founded a shoe factory in Battersea, South London, and went on to sew up the market by improving the product, extending soldiers lives and hiring veterans onto the factory floor.

"he had witnessed at Portsmouth in 1809, the disembarkation of some remnants of that gallant band [from the Battle of Corunna]. He had learnt how greatly the want of shoes had contributed to the losses which the army had sustained, and his kindest, deepest sympathies were at once enlisted”

What are the broken boots of today that need fixing? Three things: the economics, culture and technology of manufacturing.

Europe at the turn of the 20th Century constituted 70% of global manufacturing GDP. Yet today the UK stands at just 0.3%, with Europe’s share reduced by almost 60%.

This does not have to be the case. The cost of manufacturing and financing machinery in China is rising thanks to an ageing workforce and reduced state financing for machine tools and growing Chinese wages. Automation along the manufacturing process will reduce the gains from offshoring with Europe now home to the largest pool of high end machine tool makers in the world, alongside the highest calibre machinists and a burgeoning software base.

Yet manufacturing is still a fairly clunky industry. While management consultancies wax lyrical about Industry 4.0 and ‘Digital Twins’, little transformation has actually occurred. Once you get past prototype stage, the cost of any one single design change massively increases. Flowing production lines have higher capex and are therefore hard to change. In contrast to software, where incremental capex on the production line is effectively zero.

The biggest failure mode however is culture. The zeitgeist should encourage building in not just bits, but atoms. And we need to capture and replicate that coolness so that the cycle of businesses we collectively found as a species does not just make small, largely irrelevant parts of a our lives better.

Matt Clifford at Entrepreneur First said it best when he classified how ambition has changed throughout the centuries. In the medieval period the most ambitious people went into the clergy. Through the Napoleonic era it became the military. At the turn of the 21st Century it became finance. And now it is becoming startups.

But dive, fractal like, into the cohorts of companies starting today and too many are not solving problems to do with space flight or human longevity. Too many are making HR SaaS a few basis points more efficient. An opportunity has therefore arisen to attract the best and the brightest to quests of worthy ambition.