British businesses and the UK government must work together to help grow the manufacturing sector, the director general of the Confederation of British Industry (CBI) is expected to say on Thursday (5 May).
Figures released on Tuesday showed the expansion in Britain's manufacturing sector slowed down more than expected in April, as the sector slipped into contraction territory for the first time in almost three years.
The Markit/CIPS UK Manufacturing PMI stood at 49.2 last month, compared with a downwardly revised 50.7 reading in March and analysts' expectations for a 51.2 reading. The figure marked the first time the UK construction sector has fallen below the 50 threshold, which indicates no change, since March 2013.
The manufacturing industry, however, has a crucial role to play in ensuring Britain's economy remains balanced, diversified and innovative, Carolyn Fairbairn, the CBI director general, will say in a speech to manufacturing firms at the University of Warwick.
Fairbairn is expected to add that the contrast between the steel industry's high-profile difficulties and the automotive sector's record productivity, production and sale highlighted how the UK manufacturing was a 'tale of two sectors'.
"Steel gives a sharp example of where we didn't think long-term,"she is expected to say. "Where the answers didn't come until it was too late.
"Yet the automotive industry provides the evidence that a clear, collaborative approach works. The industry came together, identified barriers holding back its productivity and put its top three proposals to government.
"The government acted and deserves great credit for doing so. The results have been astounding."
Fairbairn will add that to succeed in reversing the long-term decline of the sector the government must give its full backing to a modern industrial strategy, adding businesses have to work in partnership with the government to embrace long-term opportunities and trends.
"Solutions may be about enhancing competition to encourage new disruptors to enter, further actions on skills, getting the right infrastructure in place, targeted R&D or support with digital transformation," the CBI director general is expected to say.
"Of course, because government funding is scarce, all proposals need ruthless prioritisation based on their impact on UK prosperity. That's the world we live in. And the solutions at the end of the day may well be cross-industry."
It is understood that Fairbairn will highlight the need for British businesses to embrace the digital revolution, given in the current economy the line between 'manufacturing' and 'services' is blurring even further.
"In the years to come, as digital technologies increasingly define what we make and do, I think we'll see more creative and technology companies doing things which could be classed as 'manufacturing'," she will say.
"But on digital, less than half of manufacturers agreed that adopting digital technologies would boost job creation. Without vision, British firms risk being behind in the digital revolution."