Why Mid-Sized Manufacturers Need to Invest in R&D and Innovate
Britain’s mid-sized manufacturers are at risk of being left behind, they are being too cautious about innovation and not keeping up with the rate of change; according to a recent report from NatWest. The report found that often mid-sized manufacturers lack the nessary guidance and/or are not aware of the government support on offer for overseas expansion and Research and Development (R&D).
In comparison the larger manufacturers have the international reach to adopt new technologies and the smaller manufacturers are nimble enough to avoid being subdued by the process.
So, where should manufacturers be investing?
Investment in R&D is essential, it requires funds to acquire materials, build prototypes and conduct trials and studies. You will also need to pay the wages of the employees driving these new innovations.
It is common for businesses to set aside around 3 per cent of sales to invest in R&D. These funds should be concentrated around projects with a high probability of success, your ‘big bets’ so to speak.
What government support is available?
The UK government offers a number of grants, loans, business support and funding for small and medium-sized businesses (SMEs). For instance the Grant for Business Investment (GBI) is a discretionary scheme that provides a capital grant to businesses to support sustainable investment in England. The aim of which to help expand, modernise or diversify UK businesses.
What do mid-sized manufacturers need to do differently?
In the report by NatWest, comparisons are drawn to Germany, where it was discovered that support for mid-sized businesses considerably outweighs that offered in the UK.
The report put focus on the UK Government, with Richard Hill, NatWest’s head of automotive and manufacturing, warning: “The industry is being driven by new technology and the UK is well-placed to take advantage of that. But mid-sized manufactures are at a tipping point. We need to either really go for it in terms of mentorship and support, or stagnate and be left standing still.” He also points out that mid-sized manufacturers need to be more proactive in seeking out advice on expansion and innovation if they are to have the best chance to succeed.
Klaus Schwab, the World Economic Forum Chairman, declared at this year’s WEF summit, “We stand on the brink of a technological revolution that will fundamentally alter the way we live, work and relate to one another.”
Now, more than ever, mid-sized manufacturers should be looking to be pioneers in their industry.
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