May 25, 2012

Despite Recession Bbite Sees Opportunities for Growth in the UK’s Technology Markets (4 of 4)


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The UK is officially in another recession with the dreaded ‘double-dip’ and with the economy bumping along the bottom, inevitably there is pessimism in the air.

However, at times like this, it is important to take a step back and focus on the areas in which we excel. For the UK it is innovation and in particular innovation around high-tech. The UK thrives on its culture of innovation and on the practical creativity of its graduates and engineers.

So, looking at where the UK is particularly adept at innovation, points us to markets of opportunity for growth. Global opportunities which demand high skills and technical capabilities are present within the UK’s current economy.

Continuing from Part 1Part 2 and Part 3...

This is the last in a series of 4 outlining those markets of opportunity and concludes with Wireless, Manufacturing & Development, plus an introduction to the process for absorptive capacity.


4. ICT (INFORMATION AND COMMUNICATIONS TECHNOLOGIES)

5 Key Predictions for UK Wireless:
  1. Near-Field Communications to become mainstream which drives increased investment in infrastructure. Providing a lot more than just “payments” but being held back by current shortage of handsets.
  2. We feel ‘The Need For Speed’ leading to opportunities around UK 4G LTE especially as trials in remote areas rolled out i.e. Cornwall; East End of London. The  4G Spectrum Auction in 2012 will also provide additional demand but no planned handsets until 2013 will cause a bottleneck. Additionally HSPA will be rolled out in 2012 and beyond.
  3. Location-based networking becomes more than just a check-in. Retailers and brands finally get it and use new data to revolutionise marketing which in turn drives demand for devices and infrastructure.
  4. Privacy, security and all that stuff produce more regulation and with more compliance come the need for additional testing.
  5. Payments, wallets, coupons lead to demand surges for m-Wallet type devices. Again, more data for more coupons, vouchers etc but the power consumption must be kept low, thus again driving the need for more measurement precision.

5. HIGH VALUE MANUFACTURING
Some key strategy moves include:
  • UK re-positioning itself as home of high tech manufacturing for sophisticated product.
  • UK advanced engineering having to get better products to market faster. 
  • Semiconductor electronic design complexity increasing and demanding high value competitive manufacturing in the UK.

Global manufacturing is a key provider of wealth and employment, accounting for US$10tn of value added worldwide. The UK is the seventh largest manufacturer in the world and has an industry worth £140bn – representing 11% of GDP and around 50% of exports – employing three million people. With the lowering of economic barriers to trade, the reduction in transport costs and the enabling effect of communications technology, manufacturing is highly competitive. Activity gravitates to the countries of lowest overall cost, particularly where technical barriers are low (and intellectual property can be safeguarded).

Manufacturing in high-cost economies such as the UK has had to change radically to remain globally competitive. This has resulted in a shift towards high-value, knowledge-intensive goods; a new emphasis on lifetime service around a manufactured product; a change in the business model, in terms of increasing specialisation and outsourcing of non-core activities; and a change in ownership, with the creation of large, global players, some of which are UK-owned. First technology and innovation centre in high value manufacturing opened in 2011

UK Manufacturing Market
UK manufacturing has achieved solid growth over the last 18 months. New product, process and service developments are core activities for manufacturers, as are supporting a consistent focus on the customer and efforts to capitalise on emerging growth sectors and cost reduction in the face of soaring input costs.

Results are polarised with an increase in the number of companies looking to spend greater than £500,000 on machine tools through 2012 but also an increase in the percentage of anticipating investment less than £10,000.

No manufacturing company has reported an intention to spend less on new product development.  In new product development, the trend is to bring back currently outsourced high technology activities and the likelihood of manufacturing returning to the UK over the next 12 to 24 months has increased.

Growth mainly predicted to be organic and main business drivers are:     
  • Customer satisfaction / retention 
  • Operational efficiencies / cost control
  • Quality reputation   

6. DEVELOPMENT DEVELOP INNOVATION
The UK’s abilities to harness the potential of the electron and the photon continues to bring dramatic changes to the way that society conducts its everyday life from computers and smartphones through to renewable energy generation. Electronic technologies are ubiquitous, and society is becoming increasingly dependent on them to function. The UK is well positioned to capitalise on these technologies. As of 2008, EPES manufacturing employed more than 330,000 people in 14,000 UK businesses. This is a growth industry.

Some of the challenges in the EPES sector include: the prohibitive cost of product development and manufacturing (particularly for new early-stage technologies); a fragmented supply chain; a general lack of vertically integrated companies that can realise products with an internal supply; a fiercely competitive global market.

New technologies offer the potential to create markets and provide a leading edge for the UK economy. We aim to identify and evaluate significant new technology-related business opportunities for the UK and, where appropriate, turn them into robustly argued and coherent programmes.

Look out for future information on ‘Absorptive Capacity’ of UK firms of Innovation. How do you systematically search externally for new ideas and innovations that assist you directly in bringing better product to market faster? More to come….

Bbite provides Market Research and Business Coaching http://www.bbite.co.uk/intelligence.php

The views expressed in this presentation are those interpreted by Bbite drawn from public declarations accessed during research. Bbite reserves the right to reuse this material.