Manufacturing is constantly evolving and reshaping itself. The modern manufacturer is highly innovative, agile, networked and uses information as skilfully as it machines, produces and distributes products. Driven to be ever more efficient by competitive pressures, resource efficiency is typically perused with vigour. But what are the trends and drivers that are likely to unlock clean-tech investment, stimulate green innovation, deliver a step-change in resource productivity? Here’s my top three.
Price volatility: EEF’s Executive Survey, now in its third year, consistently ranks input costs and access to materials as a key threat to growth . It is little wonder: the past decade has reversed a 100-year decline in resource prices as demand for commodities has surged. Both McKinsey and Chatham House agree that while brief periods of volatility are not uncommon, the sustained high levels of volatility across commodity markets since the beginning of the 21st century mark a new trend. With a potential additional 4.9 billion middle class consumers by 2030 , ever more soaring demand will require unprecedented levels of investment , at a time when resource supply and extraction is likely to become more challenging and resource politics is on the rise.
Regulation: Manufacturers are subject to complex array of regulation, none more so than REACH, the EU’s chemical regime which is now fully operational and increasingly touching on a diverse range of manufacturing. While awareness of REACH’s impacts on downstream users of chemicals has been poor, an EEF survey found that when companies fully appreciate the Regulations’ implications it is driving process change, substitution, significant R&D programmes, supply chain communications and is moving chemicals management up the agenda. It is also increasingly clear that we need to monitor the risk of perverse outcomes . Another key piece of legislation that is about to swing into operation is the Industrial Emissions Directive (IED). Do not underestimate its requirements on heavy manufacturing. With IED permitting commencing this year, it will drive billions of pounds of investment into pollution abatement as it is rolled out.
The carbon agenda: While many manufacturers are able to radically decarbonise operations through process electrification (assuming, of course, the grid decarbonises sufficiently) there has been a deep disconnect between the ambitions of carbon reduction schemes and the ability to respond. For some manufacturing sectors, the pathway to deep carbon reduction remains unsolved. For these sectors, increasingly, sector roadmaps are emerging as the instrument of choice to identify which actions (technologies, investments and policy interventions) are needed between now and 2050 . These are focusing minds, identifying needs and helping to share responsibility. UK Steel and Government recently began work on the development of an ambitious low carbon roadmap for the steel sector. The work forms part of a larger eighteen month project bringing together industry, DECC, BIS and leading academics to investigate and map out the long term actions required to decarbonise eight different energy intensive industries between now and 2050. This has the potential to be a game-changer if given the weight it deserves.
 EEF (2013) Executive Survey www.eef.org.uk/publications/reports/Executive-Survey-2013.htm
 McKinsey & Company (2012) Manufacturing the future: The next era of global growth and innovation
 Lee, B et al (2013) Resource Futures, Chatham House
 Kharas, H (2010) OECD Development Centre: Working Paper No. 285. The emerging middle class in developing countries. http://unpan1.un.org/intradoc/groups/public/documents/UN-DPADM/UNPAN044413.pdf
 FAO (2011) How to feed the world in 2050
 IEA (2012) World Energy Outlook 2012 Factsheet
 Lee, B et al (2013) Resource Futures, Chatham House www.chathamhouse.org/sites/default/files/public/Research/Energy,%20Environment%20and%20Development/1212r_resourcesfutures_es.pdf
 EEF (2013) REACH: Awareness, Activity and Perceptions www.eef.org.uk/NR/rdonlyres/5225A7AD-B84B-4695-9570-14CE95B719CF/21915/Reachawarenessactivitiesandperceptions1.PDF
 Business Europe position paper (27 November 2013) Competitiveness Check: the Approach to SVHC under REACH www.businesseurope.eu/Content/Default.asp?PageID=568&DocID=32389
 URS (2012) Environment protection expenditure of industry: 2011 UK Survey