David Tolfree, VP, Micro, Nano and Emerging Technologies Commercialisation Education Foundation (MANCEF)
The UK will legally leave the EU on March 29, 2019. This act, commonly known as Brexit, has become the most divisive and contentious issue for the country this century. The lack of an agreement with the EU at this time on the type of relationship that the UK will have after leaving has caused uncertainty and given rise to wide speculation.
This article is not intended to add to the Brexit debate or discuss the political issues involved but to examine the possible consequences for the manufacturing sector after the UK leaves the EU. Particular reference is made to micro and nano technologies (MNTs) because the UK’s participation in EU Framework programmes in the late 1990s has been a significant factor in their development and industrial exploitation.
Before any rational and objective narrative can be produced on the issue of Brexit, some basic facts need to be stated.
Current realities and statistics
Readers who are interested in UK trade statistics with the EU and the rest of the world can access data from a variety of publications and websites. For background information, I have highlighted some that are relevant to the topic.
International trade is the driver of growth and prosperity, it is a key element in the economy of the UK and the EU. According to the World Bank, in 2017 the world GDP was about US$80.7 tn; the UK and the EU were US$2.62 tn and US$17.3 tn, respectively1. In that year, our total trade with the world was equivalent to over half of our GDP. UK imports from and exports to the EU totalled £553 bn, with over 200,000 UK businesses trading in goods with the EU. About 43 percent of manufactured goods were exported to the EU and 53 percent to the rest of the world, compared with about 39 percent and 61 percent of services, respectively2.
The UK has trade agreements with 67 countries through its current membership of the EU (FTA67) and the rest of the world. It is a member of the Commonwealth, the G7, the G20, the International Monetary Fund (IMF), the World Bank, the World Trade Organisation (WTO), the Asian Infrastructure Investment Bank (AIIB) and the United Nations (UN)4, 5.
Aerospace and pharmaceutical are the largest contributors to the UK economy, with annual turnovers of £20 bn and £8 bn, respectively4. It is doubtful whether Brexit will substantially affect these industries since they produce high-value quality products that are in demand worldwide. They have European partners, suppliers and competitors.
The UK has a world quality research and innovation infrastructure but a fragmented manufacturing base. The latter requires unimpeded supply chains for parts and materials across Europe and the rest of the world to enable it to produce end-products. Many UK companies have partners and suppliers in Europe, particularly in Germany and the Netherlands, that have the expertise and facilities to develop and manufacture microparts. But there are many competitors in countries outside the EU that also have extensive manufacturing capability for such products, notably China, Japan and the US.
The UK’s future is not in mass production, but it has a lead in some areas of high-value manufacturing, for example, biomedical and medical devices as well as fast communication and 3D printing applications. These often require sensors and sensor systems as well as a host of other microproducts. It is doubtful whether the UK can compete alone successfully in all of them, but those that require support from an excellent research development base will have a competitive advantage if the appropriate investment is made.
Without the protection of the European Single Market, the UK will need beneficial trade agreements with other countries, particularly with China and the US, to compensate for any market losses. The UK needs more high-value niche markets for microproducts and the systems into which they are embedded.
There is, however, a wider issue that relates to the growth in the global economy where regional networks like the EU may be less important. Can independent trading nations not affiliated to regional groups become effective contributors? I believe they can, providing they use the new technologies to manufacture products needed in fields such as global communications, health, security and transport, where rapid growth is already taking place. High quality and increased functionality will more than offset higher costs if the market demand exists.
History of European funding for microtechnology
The European funding of scientific and technological research projects in which the UK has been a partner is an example of the value of EU collaboration. It may be the only area where in the past the UK received net funding from its contribution to the EU budget.
In 1996, it was EU funding for a European network in microfabrication that made the UK government and some companies aware of the importance of what was then an emerging technology. To find out more and understand the background to this, readers should read my article A brief historical review of the development of small technology infrastructure and manufacturing in the UK, published in the April 2015 issue of CMM6.
As head of the Research Councils (CCLRC) European Office at Daresbury in 1996, I initiated the UK’s participation in the first EU-funded microfabrication programme referred to above. I led its partnership with 13 other European countries and 16 institutes, Germany being the lead partner. This successful European network became a benchmark for subsequent collaborative European and national initiatives. It is significant, because in EU Research and Technological Development Framework programmes, the act of subsidiarity was strictly applied. That is, funding was only provided to initiate and support projects that could not be carried out by individual member countries within their national programmes because they did not possess the necessary knowledge, skills or infrastructure. That was the reality in the UK during the mid-1990s, so this European network project provided the starting point. Funding was not given to companies to assist in the manufacture of products but only to help in their early development. At that time, the EU rules did not allow manufacturing companies to participate in programmes as partners but they could become contractors.
The EU project, together with two of my own projects involving the development of 3D microstructures using X-ray lithography and an industry-academic consortium known as SMIDGEN (Small Microengineering, Intelligence, Design, Generation, Exploitation, Network) made the government and some companies realise the significance of microtechnology and microengineering as enablers for the manufacture of a whole range of innovative products.
It took a few years and many other initiatives before national funding became available to support the first UK micro-nanotechnology industry network. Government policy changes and departmental reorganisations—as well as public misunderstandings due to misconceptions surrounding nanotechnology—delayed the setting up of a suitable infrastructure that allowed companies to access knowledge and facilities, only available then in universities and research establishments. During that time, many companies and university research groups participated in EU-funded programmes. This may have delayed funding for national programmes and so slowed down the eventual industrial exploitation of the technologies, in turn giving commercial advantage to other countries that had already established manufacturing capabilities.
Almost two decades later, although fragmented and diffused across many industries, MNTs now enable companies to manufacture a range of products in the thousands. Perhaps the most ubiquitous are microsensors and microsensor systems. The demand for these increases daily, since they are embedded in many products and operational systems. They are spurning commercial markets for sensors, which are expected to reach a value of over a trillion dollars within the next decade7.
Currently, many UK researchers, including companies, benefit from Horizon 2020, an EU Research and Innovation programme that is making €80 bn in funding available over seven years (2014–2020). This is the sequel to the earlier Framework programmes and is the largest of its kind in the world. It will underpin future smart manufacturing and drive economic growth. In common with the earlier programmes, it also brings together top-level scientists, technologists and industrialists to expedite breakthroughs and discoveries that will help create a better future. The government is trying to negotiate the UK’s continued participation in Horizon 2020 after Brexit because of its vital importance to the scientific and industrial community. Together with other European programmes, it is embedded in the UK government’s white paper Industrial Strategy: building a Britain fit for the future8.
How Brexit will affect the manufacturing industry is a question to be examined in the context of complex growing political and commercial situations now evolving across the globe that will invariably influence global trading. I am not going to start speculating or making any predictions about a post-Brexit Britain as in a changing political situation they would probably be wrong. However, there is little doubt that trade linkages to Europe have to be sustained for the benefit of all countries.
Future possibilities
There are some encouraging developments that could become a significant issue for the UK economy. For example, the successful introduction of 5G wireless communications next year will help offset any negative impact on the economy from leaving the EU. Being one of the exponential technologies, it will enhance our digital infrastructure and underpin the development of: artificial intelligence; autonomous transport systems; diagnostic medicine; digital health; fast, personal mobile communication; seamless manufacturing; and smart cities. It will move the Internet of Things from human-to-human communication to connectivity between objects and machines such as automobiles, computer networks, buildings and domestic appliances.
Digital technologies such as 5G are essential in the Fourth Industrial Revolution, known as Industry 4.0, which originated in Germany. It is the driver of automated manufacturing and future industrial development in all European countries. Having led the First Industrial Revolution in the late 18th and early 19th centuries, the UK is well-placed to be a significant player if it adopts and exploits the opportunities presented by new technologies.
It is difficult to estimate the outcome or consequences for UK manufacturing after Brexit because the EU and other regional networks all contribute to the global market. Brexit has made economists start to examine different models for economic growth that do not depend on national or regional networks with tariff barriers. Without doubt, these are serious impediments to the formation of a more structured world where abundance can be realised for the whole of humanity.
Our long-term prosperity, even our survival, will depend on closer cooperation between nations and a pursuance of common goals. Fair trading without restrictions, protectionism or political interference is necessary for progress to be made. Unfortunately, this does not appear to be the current trend in politics and therefore, for now at least, difficult challenges lay ahead.
David Tolfree, VP, MANCEF
References
1List of countries by GDP (nominal). (2018). Wikipedia. Available at: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)
2Department for International Trade. (2017). Preparing for our future UK trade policy. GOV.UK. Available at: https://www.gov.uk/government/publications/preparing-for-our-future-uk-trade-policy/preparing-for-our-future-uk-trade-policy
3World Bank. (2018). United Kingdom: Distribution of gross domestic product (GDP) across economic sectors from 2007 to 2017. Statista. Available at: https://www.statista.com/statistics/270372/distribution-of-gdp-across-economic-sectors-in-the-united-kingdom/
4Economy of the United Kingdom. (2018). Wikipedia. Available at: https://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom
5International trade. Office for National Statistics. Available at: https://www.ons.gov.uk/businessindustryandtrade/internationaltrade
6Tolfree, D. (2015). A brief historical review of the development of small technology infrastructure and manufacturing in the UK. CMM; volume 8, issue 1, pp. 8–13. Available at: http://flickread.com/edition/html/54d0c50fd8918#8
7Bryzek, J. (2014). Trillion sensors: foundation for abundance, exponential organizations, internet of everything and mHealth. Sensor Magazin; 5/2014, pp.6–10. Available at: http://www.sensormagazin.de/dateien/smonline/redaktion/fachartikel/fachartikel2_sm5_14.pdf
8Department for Business, Energy and Industrial Strategy. (2017). Industrial Strategy: building a Britain fit for the future. GOV.UK. Available at: https://www.gov.uk/government/publications/industrial-strategy-building-a-britain-fit-for-the-future