How innovation is achieved

I think the bit to take away from this article is that a) we are good at developing ideas, and b) it takes time to apply them. The idea here, which can be used in an essay (if you are writing about competitiveness) is that manufacturing today with sensors embedded in products to relay data about performance and malfunctions will have a significant (creeping) efficiency effect - as per the two highlighted paragraphs. This is from ozy.com






Take a drive about four hours north of London — atop an abandoned open pit mine — and you’ll discover the little-known place where some of the world’s biggest companies come to tinker with tech that may shape the future of industrial manufacturing. Here, at the University of Sheffield’s Advanced Manufacturing Research Centre, or AMRC, there’s a massive machine shop and a nuclear facility, not to mention an aircraft test center, a prototyping space complete with 3-D printers and laser cutters, as well as Europe’s biggest electron beam welder.


Companies including Boeing and General Electric (GE) have all experimented here in a bid to revolutionize their manufacturing processes, and it’s where they hope their next great inventions may come to life. “The AMRC started as the playpen for companies to throw challenges at and say, ‘Hey, look, is there an easier, better, cheaper way of doing this that’s more environmentally friendly?’” says Colin Sirett, AMRC’s CEO.


And there certainly is a lot to play with today. Innovations such as cloud computing, advanced robotics, the Internet of Things, wearable technology and 3-D printing are all revolutionizing the manufacturing process in profound ways. These technologies are already able to ramp up production, though some experts expect these efficiencies to skyrocket in the near future as this technology matures — while reducing costs by as much as 40 percent, Sirett estimates. All told, American manufacturers plan to nearly double their investment in digital technologies, from roughly 2.6 percent of annual revenue today to nearly 5 percent over the next five years, for a total estimated spend of $350 billion, according to a PwC survey.

Today, machines can be fitted with sensors that track the performance of each individual part in real time, and they can even predict when an issue might take place.

The transition from traditional manufacturing to what’s often referred to as next-generation manufacturing or industry 4.0 has been largely enabled by the big data revolution. Today, seemingly every aspect of the manufacturing process — from designing prototypes to final deliveries — can be tracked digitally. In fact, Industrial IP predicts that 27 percent of the expected $14.4 trillion that will result from the Internet of Things will occur in the manufacturing sector by 2022, with a predicted total value of $3.88 trillion.


Previously, manufacturers had to wait until a product came off the assembly line with a defect to notice something might be wrong, and then invest time and energy into exploring and fixing the problem, with losses accumulating with every second of downtime. But today, machines can be fitted with sensors that track the performance of each individual part in real time, and they can even predict when an issue might take place, allowing manufacturers to correct it before any defects occur. This type of high-tech, predictive forecasting “in its nature is very significant in the manufacturing environment,” says Bob McCutcheon, the U.S. industrial products industry leader for PwC.


Meanwhile, within industrial plants, some experts see 3-D printing and additive manufacturing evolving beyond just building replacement spare parts. The technology, McCutcheon says, “can completely change not just how we make things, but how we design products in ways that could have never even been envisioned or designed with traditional manufacturing methodologies.” At this point, roughly two-thirds of manufacturers surveyed by PwC are adopting the tech in some way.

Each of these technological developments may seem exciting on its own — at least to industrial geeks who feel at home on a manufacturing floor — but it’s their powerful combination that will bring about the most significant and productive evolutions in manufacturing. Just imagine a wind turbine in a remote location that’s days away from a mechanical failure. Sensors in the machinery could identify this potential problem and deploy a service technician to the site. That technician could then quickly 3-D-print a replacement part and service the equipment as other technicians supervise via video streaming through the technician’s smart glasses.


While the potential for this kind of a reality exists, there are a number of significant hurdles that have yet to be overcome. Most — upward of 90 percent — of machine tools on shop floors don’t have all these fancy sensors on them, says Dean Bartles, the executive director of the Digital Manufacturing and Design Innovation Institute in Chicago. And replacing that existing manufacturing equipment with “smart” machines will take a major investment by industry players — one which many manufacturers can’t yet afford. Then there’s the issue of Internet security, which becomes more prominent as more machines are connected and controlled through the Internet.


Still, the combination of connected devices, the Internet of Things, 3-D printing and big data has already begun to revolutionize the manufacturing process. McCutcheon likens it to the invention of the iPhone, explaining that once the technology became available, developers were able to build incredibly innovative apps that were hard to imagine before Apple’s App Store ever opened its virtual doors. “We’ve got the technology,” he says. “Now step back and watch all the innovation that takes place.”

Quick article on productivity

NB I advised Ed not to use HS2 as an example of a driver of productivity because it is getting a really bad press at the moment; to support this look at Qatar's "ambitious plan for its railways, and compare the costs!


Walk around the most productive country on the planet and you’ll kink your neck staring up gleaming, futuristic skyscrapers and across the walls of world-class museums. If you’re lucky, you might even spot a man-made island boasting yacht-lined marinas — that is, if a sandstorm doesn’t sweep in front of your face.


While human habitation here dates back some 50,000 years, our much more recent journey for industrialization has accelerated economic growth — and the quality of life for many, but not all — in dizzying ways. “Productivity has always been the engine of growth,” Marco Annunziata, General Electric’s (GE) chief economist, has written. “Most importantly, productivity is the key driver of per capita growth, which results in better living standards.”

If you haven’t guessed it by now, Qatar is not only home to the highest per capita income in the world but also the most productive nation, according to The Conference Board’s Total Economy Database.

Indeed, when economists crunch numbers about labor productivity levels based on output per person and output per hour, Qatar comes out on top, followed by several other contenders from the Middle East, including the United Arab Emirates, Saudi Arabia and Kuwait — thanks, in large part, to their oil revenues. Traditionally, that’s contributed to a higher level of GDP, “which is reflected in their productivity levels,” says Abdul Azeez Erumban, senior economist at The Conference Board.


But it’s not as matter-of-fact as that. Sure, oil-rich nations might have an edge over competition, but we’ve all seen the headlines about shaky oil prices in recent years, compared to its heyday of the past. And only a bit further down the list for labor productivity comes Luxembourg, Singapore, Ireland, Norway and, yes, the U.S. Shawn Sprague, economist for the Bureau of Labor Statistics, says that a range of factors can drive productivity — from investing in faster equipment to hiring a skilled workforce and reducing equipment downtime.


All the while, technological innovation is driving productivity, which in turn helps to improve living standards. However, we’re just beginning to turn the corner to the newest movement known as the IT revolution, Erumban says. In countries such as the U.S. and Ireland, where there’s a high percentage of information and communications technology (ICT) services, the benefits of a new digital economy translating into productivity gains has yet to fully arrive. Right now, Erumban explains, these countries are still transitioning from an old-school digital economy — think software, hardware and communications equipment — to a new digital economy where rich ICT services, including the cloud, are still being installed and activated.

Of course, the leading country in productivity is also dabbling in the IT revolution in more ways than one — from deploying an advanced cooling system in its recently constructed (and highly controversial) World Cup stadiums that are powerful enough to overcome Qatar’s searing-hot summer temperatures, to enlisting next-generation ICT services and smart solutions to help drive Qatar Railways Company’s $40 billion plan to develop one of the largest rail projects in the world. All of which, the country hopes, will boost quality of life across the board, even as it continues to face criticism about the treatment of some of its foreign workers.


At the same time, there’s also Qatar’s National Vision 2030, an ambitious plan in which the country is working to reposition itself away from being as oil-dependent to more of a hub for research and discovery in energy, environment, health care and information technology and telecommunications. The only challenge? It’ll have to beat the rest of the world that’s also fighting for those same great gains.

Great article about skills gaps and immigration

Really useful for proper context, plus some evaluation thrown in to boot:


Is migration the answer to the skills gap?

Brought to you by

The rules have been tightened for non-EU workers seeking employment in the UK

24 December 2015  

Sean Hargrave

It may be a political hot potato but could the answer to the UK’s skills gap come from bringing in recruits from overseas?


All employers know it can be difficult to find staff. Whether they are looking for highly or low-skilled employees, filling positions from the UK labour force is tough.


An easyJet survey of 1,000 companies found that the biggest issue facing companies with more than 20 employees is recruitment and retention.


Additionally, a recent global review of skills from the Hays recruitment company found, among EU countries, the UK had the fourth highest talent mismatch between skills required and available. Only Ireland, Spain and Portugal had higher mismatches.


Though it may be politically sensitive, the answer many are opting for is to bring in skills from abroad. This may prompt questions about whether this puts British workers at a disadvantage with jobs going to migrants who may push down wage levels.

But Chris Lawton, senior research fellow in economics at the Nottingham Business School, Nottingham Trent University, points to a Home Office and Department for Business, Innovation & Skills joint report on migration in March 2014. It found little evidence to suggest migration was negatively impacting British workers.


“The figures just don’t back up the perception some have that migration damages British workers in some way,” he says.


“Although you can never underestimate the social challenges of large changes in local population, you have to bear in mind that, economically speaking, the country has never employed more people; unemployment is at a pre-recession level of around 5pc at the same time as the latest Office for National Statistics figures show net migration is at a record high. So, employment’s high, vacancies are high and unemployment is low, despite record migration.”


Despite the generally positive outlook, he says the skills gap is a very big issue for employers, citing government figures that of the 740,000 vacancies the country currently has, around 146,000 roles are proving hard to fill because of a lack of suitably qualified or experienced candidates.


Despite this, there has been what Mr Lawton calls a disconnect between what the data shows and the migration policies pursued by the Home Secretary, Theresa May. Under the previous coalition and the current Conservative government she has tightened rules on non-EU workers entering the country and then being able to remain.

Difficulty finding talent

According to Jonathan Beech, managing director of Migrate UK, which helps companies bring in overseas talent, this is making it hard to bring in the skills many companies require. In particular, companies looking to fill roles that require qualified and experienced candidates in IT, science, engineering and manufacturing are struggling to bring in the right people within an acceptable time frame.


“There’s the misconception that people can just walk in and take British jobs and then stick around for as long as they want, but nothing could be further from the truth,” he says.


“We’ve seen successive amendments to immigration rules that are making it far tougher to bring people in. Companies would rather employ people locally but the skills just aren’t there a lot of the time.

Companies would rather employ people locally but the skills just aren’t there a lot of the time

“They have to prove this by advertising a position for 28 days and they can then apply for a licence to bring someone in from outside the EU who will not be allowed to stay beyond five years. This is now based on a quota system for a variety of skilled jobs, and it’s only very recently that one of these monthly quotas has been reached, and they were started in 2008.


“So the public perception is a million miles away from the reality, and tougher rules are simply placing unnecessary burdens on employers.”


The biggest issue for many British companies is that they risk losing out on top talent because the recruitment process can take several months, in which time it is likely that a candidate will have been attracted to another role outside the UK.

A numbers game

Rhys Morgan, director of engineering and education at the Royal Academy of Engineering, has noticed that since rules were tightened both qualified and student engineers are “voting with their feet” and choosing to study in the US and Canada where they are more likely to be allowed to look for a job once they have finished their studies.


He believes tighter work visa rules fly in the face of an inconvenient truth that the UK has to look beyond the EU to fill the vacancies for highly skilled work that increase in number every year as Britons retire.


“At the moment we can produce around half of the 100,000 engineers we need to find every year to fill vacancies and make up for those people who are leaving the industry,” he says. For the foreseeable future, the choice is unfilled vacancies or migration.

“That pales into insignificance when compared with the 500,000 engineers a year India is producing or the one million in China. We just can’t compete with those numbers, so it makes sense to let talented young people come here.”


For those involved in the industries that are calling out for more highly skilled candidates to fill vacancies, migration is not so much a political debate as a business requirement, he argues.


Even if schools began the necessary steps of producing suitably qualified young people today, the holy grail of more IT experts, manufacturing experts, scientists and doctors would still be more than a decade away. So for the foreseeable future, the choice is unfilled vacancies or migration.

Some tip-top evaluation material on UK exports

Key points highlighted, all useful at some point in a trade essay:

More buyers wanted

Exports continue to disappoint, even in sectors where Britain should do well

Feb 6th 2016 | From the print edition

The shipping forecast: gloomy

THE prime minister summed up Britain’s trade dilemma when he said last year: “We’re still selling more to Hungary than to Indonesia—even though Indonesia’s population is 25 times bigger. We still do more trade with Belgium than we do with Indonesia, Malaysia, Singapore and Vietnam combined.” At which point David Cameron got on a plane, accompanied by a delegation of businessfolk, and jetted off to South-East Asia to try to do something about this glaring imbalance.

Plenty of ministers have been criss-crossing the world during the course of Mr Cameron’s governments with the same aim in mind. Mr Cameron himself has been to India three times. The government has been banqueting the likes of China’s president and India’s prime minister in London, all to improve trade. Yet for all the ministerial airmiles and silver goblets, the country’s exports have remained fairly flat, and have been getting worse since 2012, certainly compared with those of the other big rich economies in the G7. The value of Britain’s exports fell by 1.5% in 2014 from 2013—the only G7 country where exports dropped—and last year’s figures were hardly inspiring, with a 1.5% fall in the three months to November compared with a year earlier. “It has been a disappointment, especially after the devaluation of sterling in 2008-09,” says John Van Reenen, head of the Centre for Economic Performance at the London School of Economics (LSE).

 

Sterling fell by 15% against the euro and 24% against the dollar during the 2008 financial crisis, and this did help exports in the short term. But since 2012 Britain has been struggling, even in the sectors it usually does well in. Thus the government’s hopes of recapturing some of Britain’s past trading glories and doubling exports in goods and services to £1 trillion ($1.5 trillion) by 2020 will remain exactly that. These trends also have ramifications for the argument raging over whether Britain should leave the European Union.

On the positive side, at least one rebalancing has been relatively successful. Britain’s trade with the rest of the world has been ahead of its trade with the EU since 2008 (see chart). To Eurosceptics, this is evidence that Britain could flourish outside Europe. But although Britain’s exporters have been getting a foothold in the emerging markets, they have not been as successful as they might have been. With the exception of China, which takes about 5% of Britain’s exports, trade in goods and services remains pedestrian.

For although nobody expected Britain, where manufacturing has shrunk to around one-tenth of GDP, to export many manufactured goods to emerging markets in the way that Germany does, the country was predicted to do much better in services such as banking, accountancy and education. This is where Britain has its main competitive advantages, such as the English language. Its trade in services with the EU has been growing at just over twice the rate of EU growth, but elsewhere the picture is less rosy. Although Britain’s services trade with emerging economies rose fast in 1998-2012, as the Centre for European Reform, a think-tank, points out, only in the case of Brazil did Britain’s exports “grow significantly faster than the economy concerned”.

Thus, as Paul Hollingworth of Capital Economics, a consultancy, argues, Britain has not been gaining market share in emerging economies. Indeed, its exports of services probably slowed in 2014 compared with 2013. Partly for this reason, trade with big countries like India remains small, and minuscule in the case of populous, fast-growing (if poor and distant) Indonesia. It has become a mantra among boosters of British trade to India and other emerging markets that as they become richer so they will need more of Britain’s bankers and fewer of Germany’s machine-tools. But, warns Swati Dhingra, a trade economist at the LSE, there is little evidence to support that theory so far. India, for instance, is not much in need of British expertise in business services, in which it has already developed its own industry.

There are other reasons for what the British Chambers of Commerce (BCC) has called this “missed opportunity” in emerging markets, aside from the strengthening pound. Simon Walker, the head of the Institute of Directors, another big business-association, fingers the government’s lacklustre support for exporters on the ground, despite all the ministerial jet-setting. “Britain is bad at focusing on specific business opportunities and identifying market gaps, especially in less sexy areas,” he says, adding that France and Germany do this much better. Rather feebly, British exporters struggle with language and culture outside the Anglosphere, according to surveys by the BCC of its members; it argues that too many mid-sized companies, in particular, have no ambition to export.

Then there is the question of red tape and access to markets. Trying to satisfy all 28 of its members means that the EU often takes years to negotiate free-trade agreements; Eurosceptics argue that if Britain were unencumbered by the lumbering EU it would more easily cut its own bilateral deals with countries and boost trade. But economists warn that Britain’s bargaining position would be so much reduced on its own that it would be hard to get any very beneficial deals. And as Ms Dhingra points out, it is Britain itself that has contributed to holding up the India-EU free-trade deal, on the issue of immigration.

Exporters will get a short-term boost in the immediate future as sterling has weakened over the past weeks. But recent history suggests that in the longer term there are no shortcuts to boosting exports—it’s just more of the old slog of flogging a product that people want at the right price.

From the print edition: Britain