The 4th industrial revolution is upon us. Internet connectivity is a key part of the modern business environment and is important to UK manufacturing.
Decisions made now on the type of digital infrastructure network the UK will have in the future will impact on manufacturers. Manufacturers need a business environment in the UK that works for them; internet connectivity is an important enabler to that and will support a productive, skilled and investment and export intensive sector.
Manufacturers view internet connectivity as important. In our Business Environment survey in 2014, respondents cited it as the second most important infrastructure network for investment. In a recently conducted survey by us on digital infrastructure, 91% of manufacturers say a high speed internet connection is as essential to business as electricity and water.
Manufacturers are heavy users of internet connections for a variety of reasons
Our recently conducted survey shows that manufacturers use the internet daily for basic online tasks such as email and 95% need to access secure online services every day. A large share of manufacturers also use their digital connections for other tasks:
- 53% of firms need to access online data repositories such as “the cloud” every day
- 55% of firms need internet access for resource planning (for example, ERP systems) every day
- 48% of firms use internet connected objects such as sensors and automated machines at least once a week
Good progress has been made
Our survey shows that good progress has been made with digital infrastructure. Half of firms said their internet connection has become faster over the past two years and over half describe their company's internet upload and download speeds as being fast enough for their needs.
However, almost half of companies say their connection costs have gone up in the last two years, whilst a quarter of small companies and half of medium size companies are paying over £5000 per annum to gain proper access (this rises to 89% for large companies).
Could digital connectivity be a drag on future growth?
Whilst manufacturers say the landscape is broadly ok for a large proportion of them, the picture for the future raises a few more questions.
Internet connected capital equipment is going to become more prevalent and 62% of firms expect to be investing more in this area in the next five years. Indeed, half of respondents to the survey say their current internet connection is not adequate for their expected needs over the next five years, with just 35% disagreeing.
The fundamentals need to be there
The importance of internet connectivity to manufacturers businesses is clear – 86% of survey respondents say that every business should have a right to a high speed internet connection.
Just a fifth of companies agree that compared to other countries in the European Union, the UK is at the forefront of internet connectivity – with 36% disagreeing. Indeed, 74% say the UK should push for the completion of a digital single market to allow businesses to seamlessly access online goods and services across the EU.
Following these results there are a number of practical steps the government can take to maintain the good progress that has been made on digital infrastructure and to create a fertile business environment for the rollout of Industry 4.0.
In response, we say...
EEF is making the following recommendations of government:
- Task the National Infrastructure Commission with assessing the UK's digital infrastructure network and outline an investment path that will see the UK consistently delivering internationally competitive internet access to businesses.
- Launch a review of competition for business broadband, with a particularly focus on leased lines, with the aim of getting the cost to businesses falling over this Parliament.
- Ensure Innovate UK has the funding to work with industry to develop cluster networks of early adopters by easing the uptake of digital technologies across industrial supply chains, this should include supporting investment in physical industry 4.0 demonstrators.
- Be proactive in pushing for full implementation of the digital single market in goods and services across the EU to deliver benefits for UK businesses.
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