Making it Smarter
Global Lessons for Accelerating Automation and Digital Adoption in UK Manufacturing
Today, Make UK, in partnership with Sage, launches a new report: Making it Smarter: Global Lessons for Accelerating Automation and Digital Adoption in UK Manufacturing. The report sets out how targeted innovation and digital investment, especially in small and medium-sized manufacturers, could add £150 billion to the UK’s GDP by 2035.
The potential of digital technologies
For UK businesses, the benefits of digital technologies such as artificial intelligence, digital twins, and robotics are vast:
Firms that integrate digital tools are more productive, achieving higher total revenue per worker.
Robotics adoption drives product and process innovation, boosting long-term profitability.
AI-led optimisation reduces carbon emissions, aligning growth with sustainability.
Flexible, digital-first production improves resilience and agility, strengthening supply chains.
Technological innovations have always been a driver of GDP growth. Emerging technologies such as AI are expected to deliver the next wave of productivity gains, translating into higher wages and improved living standards.
With the new Labour government setting its ambition for the UK to become the fastest-growing economy in the G7, accelerating digital adoption in manufacturing is no longer optional, it is essential. If UK manufacturers matched global leaders in technology uptake, the prize would be £150 billion added to GDP by 2035, a 5% boost compared to today.
The UK is falling behind
Despite world-class research and innovative tech firms, the UK is not embedding digital capabilities across its manufacturing base.
The UK ranks just 24th in global robotics density.
Industrial robot installations are less than a tenth of South Korea’s.
Our competitiveness is slipping: the UK has fallen to 19th in the UNIDO Industrial Performance Index, and our share of global manufacturing exports has halved since 2000.
SMEs, who form the backbone of UK manufacturing, are the hardest hit. They face fragmented support, complex funding systems, and a persistent digital skills gap. Many projects stall after initial investment, not through lack of ambition, but because companies cannot access the advice and expertise to make technologies work for them.
Global lessons for the UK
Other advanced economies show that it doesn’t have to be this way. A clearer, SME-focused approach to industrial strategy can accelerate digital adoption, boost competitiveness, and strengthen resilience.
Germany: harnessing research and SME power
Germany’s economic strength lies in its Mittelstand, a network of small and medium-sized firms closely linked with world-class research institutes. The Fraunhofer Institutes, established in 1949, bridge the gap between academia and industry, providing applied research and reducing the financial risks of innovation for SMEs.
Germany’s ZIM programme delivers R&D support designed specifically for smaller firms, in contrast to the UK’s broader, less targeted Innovate UK schemes. Programmes like go-digital and the Mittelstand-Digital Initiative provide free expert advice, testbeds, and workshops, all under one roof. Meanwhile, generous R&D tax credits of up to 35% for SMEs incentivise long-term innovation.
The result is a joined-up ecosystem that makes it easier for smaller firms to digitise and innovate, something the UK has yet to replicate at scale.
Singapore: integrating SMEs into Industrial Strategy
Singapore demonstrates the power of coherence and accountability in industrial policy. Its government has committed S$25 billion through the RIE2025 plan, targeting robotics, semiconductors, and biomedical sciences, while also supporting enabling technologies like AI and sustainable manufacturing.
Crucially, Singapore ensures SMEs are not left behind. Programmes like T-Up second researchers into small businesses, embedding knowledge and accelerating digital adoption. The Collaborative Commerce Marketplace and sector-specific roadmaps connect firms with practical tools, while grants cover up to 70% of technology adoption costs.
Singapore also champions international collaboration, running open-ended co-innovation programmes with Germany, Canada, and others, giving SMEs flexibility to pursue global partnerships. Combined with generous R&D tax incentives, including up to 400% tax deductions, this ecosystem has helped Singapore sustain one of the world’s most advanced manufacturing sectors.
South Korea: driving digitalisation at scale
South Korea, where over 99% of manufacturers are SMEs, has transformed its industrial base through long-term strategy and bold investment. The Smart Factory Initiative has digitalised tens of thousands of firms, backed by tailored vouchers for automation, software, and skills training.
The government has committed to training 40,000 workers to operate automated systems, ensuring the skills pipeline keeps pace with technological change. Meanwhile, the K-CHIPS Act offers some of the world’s most generous R&D tax incentives, up to 30% for SMEs investing in semiconductors, with certainty guaranteed beyond 2029.
The results are striking: firms adopting smart technologies report a 25% increase in productivity and a 27% reduction in defects. South Korea’s joined-up approach contrasts sharply with the UK’s fragmented support landscape, highlighting the need for consistency, scale, and long-term vision.
What needs to change
The UK government’s Industrial Strategy aims to build a digitally literate workforce by 2035, but manufacturers cannot wait a decade. If we are serious about revitalising UK manufacturing and unlocking a £150 billion economic boost, we need to act now.
Make UK is calling for:
Targeted funding for digital and engineering skills to meet immediate industry needs.
A single, SME-focused umbrella hub to simplify access to advice, funding, and testbeds.
Long-term, stable incentives that give businesses confidence to invest in digital technologies.
Stronger collaboration between universities, SMEs, and large firms, ensuring UK research translates into commercial success.
The UK has the research base, the talent, and the industrial capacity to lead in advanced manufacturing. But without a clearer strategy to support SMEs, we risk falling further behind our competitors.
Germany, Singapore, and South Korea show that the right policies can transform ambition into performance. The UK must now create a more integrated, SME-focused model that embeds digitalisation across our manufacturing base.
Thank you for reading. For more information or a copy of the report, visit our website here.