UK targets 55pc rise in electronic systems to create £120billion industry by 2020

Leading members of the UK’s electronic systems industry have outlined a strategy that aims to significantly grow the UK’s electronic systems industry to £120 billion (up 55%) by 2020 and create an additional 150,000 highly-skilled jobs. Called the ESCO report, (Electronics Systems: Challenges and Opportunities), the strategy document details how the industry can grow to contribute 7.1 per cent of GDP by 2020. The Report was created for the Department of Business, Innovation and Skills.

The rise from today’s £78 to £120 billion would place the sector among the top 5 UK industries. The sector would also support over 1 million skilled jobs, making it a top-5 UK employer.

The report makes several key recommendations, including measures to improve supply chains and strategic procurement, the skills pipeline and the formation of a think tank to identify future growth sectors. But, it also warns failure to take immediate action on these recommendations will have implications for the competitiveness of every industrial sector and the UK economy.

Pond Ventures’ Jamie Urquhart, who chaired ECSO said: “This technology is the basis for almost all facets of our lives, from communications to healthcare to transport to education. By working closely together to implement the recommendations we can achieve significant economic growth.”

Significant growth is forecast in electronic systems for automotive, aerospace, energy and medical vertical sectors, which each have clusters of excellence, allowing the creation of jobs across the UK.

Recommendations include:

Innovation: the ESCO committee will establish “Markets of Tomorrow”, a think tank to direct investment into future growth technologies, strategically directing innovation that will help the UK industry stay ahead of the curve.

Supply chain & strategic procurement: the report emphasises the need to establish closer links between the electronic systems community, manufacturers and service providers in the key vertical sectors as well as fostering stronger partnerships at the R&D and technology development stages.

The report especially draws attention to the vertical sectors’ leadership councils as the key starting point for developing these links.

Skills: the report states that critical shortages of high-end skills are hindering growth, and that there is a need to attract more of the brightest young people into careers in the industry.

Particular emphasis is placed on creating awareness of the sector’s importance and career opportunities, apprenticeships and graduate skills initiatives.

The committee is also working with the UK Border Agency’s Migration Advisory Committee to ensure talent is attracted to and remains in the UK; welcomes the recent changes recommended by the Migration Advisory Committee.

Taxation: The report is supportive of changes made by the government, particularly referencing the R&D tax credit and the seed enterprise investment fund initiatives. It recommends yet closer liaison between the industry and government to advise on how future changes to taxation can further advance innovation and create a nurturing environment for innovative UK start ups.

Warren East, CEO of ARM, backed the report: “ARM has demonstrated that UK businesses can achieve global leadership from a UK base. To make sure that we produce ‘more ARMs’ in the future, both business and Government need to drive change. With the great potential that exists here we must ensure we create the right culture and climate in the UK to foster talent for the technology businesses of tomorrow.”

The UK is already renowned as a leading innovator in the electronic systems sector, and 14 of the world’s top 20 semiconductor companies have established design and/or manufacturing operations in the UK.

The country is also home to the world’s two leading chip IP firms (ARM and Imagination Technologies) and many of the world”s leading research universities. British electronic engineers are renowned for delivering exceptional innovation and many overseas firms create R&D centres in the UK to benefit from the talent that exists here. Indeed, several of the worlds most advanced complete electronic systems and embedded software applications are also developed here.

But compared to South Korea, which has a similar size, GDP and population, the UK has previously failed to create strong international electronics brands.

The report calls for a long-term strategic approach between government and industry to ensure that the right ecosystem is in place to encourage the investment and entrepreneurship that will trigger the rise of these high-growth enterprises.

Indro Mukerjee, CEO of Plastic Logic and Chairman of the Semta electronics group and UK Electronics Skills Foundation said: “A crucial element to achieve this growth in the run up to, and also beyond, 2020, is skills. Electronic systems is about everything from semiconductors to embedded software and the UK ES community is exceptionally varied in what it produces with tens of thousands of firms working actively throughout the supply chain. We therefore need to develop sufficient home grown talent to match skills needs: from manufacturing to embedded software to IP.”

The ESCO Report was created at the request of the Department of Business, Innovation and Skills.

The initiative was led by trade bodies NMI, GAMBICA and Intellect alongside Semta, UKEA and ESP .

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