Making Scotland's Future - recovery plan for manufacturing - draft: consultation

Foreword

Scotland has always been a nation of creators and makers and our manufacturing innovation and expertise continues to be a critical part of our economy, supporting over half of Scotland’s international exports.

Manufacturing is a key source of business research and development, and of high-quality employment. Pre-COVID-19 figures show the sector was worth £12.5 billion in Gross Value Added (GVA) – approximately 13% of total GVA – and employed approximately 170,000 people, many in highly-skilled jobs.

Manufacturing businesses, small and large, are found in urban and rural communities all over Scotland. And it’s a diverse sector. Food and drink makes up a third of GVA but the size and value of less traditional sub-sectors is growing. Computer and electronics manufacturing, for example, now accounts for one in every 15 manufacturing jobs.

Like many parts of the economy, however, manufacturing has been deeply affected by the COVID-19 pandemic, and in different ways.

While some sectors such as aerospace and oil and gas have inevitably felt the full force of the public health restrictions on our lives, they and others are identifying opportunities to adapt, innovate and grow.

Nowhere has this been more apparent than among those companies which played an integral role in the immediate pandemic response, stepping up when asked to divert production towards the manufacture of personal protective equipment (PPE) and other life-saving NHS supplies. Pre-COVID-19, all PPE sourced by NHS Scotland came from manufacturers outside Scotland, but this winter nearly half of PPE will be supplied from Scotland.

This type of flexibility and adaptability, particularly in terms of embracing digital solutions, must become part of our DNA if manufacturing is to succeed in increasingly volatile market conditions. COVID-19 and the UK’s exit from the EU have brought into much sharper focus the challenges that manufacturing businesses face in the 21^st century: economic uncertainty, rapid modernisation and international trade barriers can all impact on their ability to survive and grow.

Present circumstances also highlight that change can bring opportunities in the shape of new products, new customers and new markets. The task that lies ahead of us is to work in partnership with every part of the manufacturing sector so that businesses can survive and thrive; weathering the current storm of COVID-19, preparing for the challenges presented by the EU exit, adapting to future global trends such as digitisation and the transition to net zero, and looking ahead to a brighter future.

A successful, vibrant, diverse and advanced manufacturing sector is critical to our long-term economic recovery and success: creating jobs, driving innovation and growth, and boosting productivity and wellbeing.

In line with the report of the Advisory Group on Economic Recovery, which recommended that bespoke sector recovery plans are put in place, Making Scotland’s Future: A Recovery Plan For Manufacturing proposes a series of actions for public agencies, industry and academia to take forward by the end of 2021. They are designed to secure a strong, sustainable future for the manufacturing sector across four inter-dependent priority areas:

• Collaboration and networks
• Supply chains and competitiveness
• Adaptation and transformation
• Skills and workforce

These proposals will be the subject of rapid engagement with the sector’s stakeholders over the next two months, before being finalised in early 2021. That will include seeking views on complementary Equality and Fairer Scotland Impact Assessments, reflecting our collective commitment to fairer outcomes and to ensuring these inform final actions.

Common to each area of work is a commitment to putting sustainable manufacturing at the heart of the sector’s recovery. This is not just the right thing to do in the face of the climate emergency, but a win-win for the sector too: reducing companies’ emissions and costs; and ensuring Scottish manufacturing can compete in domestic and global markets as low carbon products become increasingly attractive to consumers and buyers.

Manufacturing has an opportunity to be at the heart of a global green recovery, helping Scotland meet its target of generating net zero emissions by 2045 and increasing our international competitiveness by making a more attractive place for trade and investment. The £1.6 billion low carbon funding pledged in the Programme for Government, including a £100 million Green Jobs Fund and £60 million for industrial decarbonisation, will help to secure a just transition to a net zero economy.

Making Scotland’s Future: A Recovery Plan For Manufacturing sets out a bold agenda for the next year, and strengthens the platform for longer-term growth.

While the impact of COVID-19 has been a severe blow for many in the sector, over recent years Scotland has created an enviable portfolio of manufacturing support assets and enhanced support for manufacturers. This includes the Advancing Manufacturing Challenge Fund, our Innovation Centres and the National Manufacturing Institute Scotland (NMIS), that are capable of fundamentally changing how companies harness the power of technology and innovation to drive growth.

So, while this is undoubtedly an extremely challenging time for the manufacturing sector, we have in place strong foundations. By building on these and by harnessing our collective talent, expertise and pioneering spirit we can stand tall as a nation known for inventing, designing, developing and building world-leading products and technologies.

Manufacturing made Scotland’s past. Now it’s time to work together to ensure it makes Scotland’s future.

Fiona Hyslop MSP

Cabinet Secretary for Economy, Fair Work and Culture