Rethink: manufacturing or services?

Is the UK destined to be an economy that only provides services and no longer makes things? Whether you agree with that statement or not, it's a narrative that's stuck with the UK for decades.

There are now far fewer large homegrown manufacturing firms than there were 60 years ago, which contribute far less as a percentage of national income. In the 1960s, a third of the UK workforce was employed in manufacturing, but now that's down to less than 10 percent.

But not all of those workers in the 1960s were on the production line; many were in-house cleaners, cooks, drivers and even barbers. Those roles were contracted out decades ago, and are now counted as service jobs.

So there's always been a blurring between these two parts of the economy, and now, increasingly, companies are finding ways to hold on to customers by adding value, such as car mechanics offering a free courtesy vehicle, or a laser printer company telling you when the ink is running low in your machine.

This called servitization, and because of advanced data analysis, manufacturers are now even able to provide an outcome, rather than just a product.

It's the difference between selling jet engines and instead providing guaranteed thrust for airliners.
Or the difference between selling a gas boiler and instead guaranteeing a warm home when a customer needs it.

It's a business strategy that has risks, but it can make a customer's life easier. It can lead to higher profits, less waste and greater productivity. But despite its benefits, the value of servitization to the UK economy isn't being measured. So is it time to rethink the relationship between manufacturing and services?

Presenter: Ben Ansell
Producers: Ravi Naik and Tom Gillett
Editor: Damon Rose

Contributors:
Tim Minshall, the Dr. John C. Taylor Professor of Innovation and Head of the Institute for Manufacturing at the University of Cambridge.
Diane Coyle, Professor of Public Policy at the Bennett School of Public Policy at the University of Cambridge.
Tim Baines, Professor of operations strategy at the Aston Business School in Birmingham, and head of the Advanced Services Group.
Matt Skipworth, Vice President of Services Globally and Digital Solutions at Genie.
Andy Neely, Professor of Manufacturing at the University of Cambridge.