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Dave Atkinson, UK Head of Manufacturing SME & Mid Corporates, Lloyds, sits down with colleague Tim Biddle, Head of Asset Finance and Prof Mike Wilson, Chief Automation Officer at MTC (Manufacturing Technology Centre), to discuss automation investment in the UK manufacturing sector.
Dave Atkinson: “Manufacturers are making significant investments in AI, automation, robotics and digitalisation to help offset cost pressures and improve operational resilience. These technologies offer real productivity gains, including better quality control, predictive maintenance and reduced waste. However, a significant adoption gap exists. What do manufacturers tell you is deterring them from investing in automation and robotics?”
Mike Wilson: “There is a perception that Automation and Robotics (A&R) is expensive and requires highly specialised skills to deliver within a business. Small businesses are understandably cautious when investing in new technology, especially when additional cost is involved. The other consideration is how it will directly impact productivity and output, which is often difficult to measure before implementing.”
Tim Biddle: “When we look to other developed economies around the world, we see a more long-term mentality where it’s not unusual for manufacturers to have investment cycles with return assumptions that can be up to 10 years long. In the UK, there is a much shorter return expectation, which can prevent firms from deciding to invest in A&R.”
Dave: “What would you say to manufacturers to help overcome these concerns?”
Mike: “Manufacturers would benefit from being more competitive and productive, both of which can be achieved through A&R adoption. These systems do not have to be as expensive as is often perceived and training is widely available to help upskill employees.”
Tim: “A&R is key to long-term competitiveness. The work being done by the likes of MTC is helping bring the technology to the fore and make it more accessible, but it’s also down to Lloyds and other lenders to normalise financing for A&R. We have to make sure manufacturers know that we support these kinds of investments, and not just for larger businesses, but for SMEs as well.”
Dave: “What kinds of A&R solutions are available for UK manufacturers? And what about financing?”
Mike: “There’s a full range of robot solutions that are available, many of which have a proven track record of delivering improved productivity. Solutions like machine tending, welding and palletising would be good starting points for many manufacturers who have not implemented a robot solution before.”
Tim: “From a financing perspective, traditional banks like Lloyds are happy to finance investment in A&R with relatively standard Asset Financing products like Hire Purchase. But, while there are some very straightforward A&R applications, like autonomous forklift trucks, procurement can also sometimes be complex.
“It might involve a systems integrator going to a panel of suppliers and piecing together a bespoke solution, and a lot of A&R manufacturers are overseas, which can present some challenges in financing that upfront cost. There are options to secure initial loans, such as Capital Import Finance, that then translate into a traditional Hire Purchase product once the solution is put together and is functioning.”
Dave: “What is the first step for manufacturers who are exploring the automation opportunity?”
Mike: “The first step is getting the necessary help and support to select the most appropriate application.”
Tim: “After identifying this, the next step is to approach a lender like Lloyds to provide a financing solution that suits your plans, which might be a fairly generic product or a more tailored package. We are also working with the A&R supply chain to develop a proposition to make their products more attractive and accessible. That means partnering with the manufacturers, distributors and systems integrators to provide financing alongside their technologies.
“It’s another way we can help manufacturers connect the dots and find the financing solution for them, so watch this space!”
Dave: “How can manufacturers minimise the risk that comes with investing in automation?”
Mike: “Independent support is available from organisations including MTC and others to help guide you through the procurement journey. That can include developing the business case, writing a requirements specification and selecting the most appropriate supplier.”
Tim: “Where manufacturers face a cashflow challenge, we can help, whether that’s with an Invoice Financing solution, a trade finance facility or Asset Finance that enables them to take on more business and grow more quickly. We can help them understand exactly what that means in terms of monthly payments to support their budgeting and planning, and make it easier for businesses to say yes to investing.”
Dave: “UK manufacturers already have a skills shortage. Could automation actually attract more people to work in manufacturing?”
Mike: “Absolutely. A&R helps address skills shortages in two ways. Firstly, for example in welding, robots can undertake the mundane, repetitive tasks, being tended by unskilled personnel. The skilled welders can then apply themselves to more complex tasks, creating more interesting, satisfying jobs where their skills can add real value. Secondly, it’s creating interesting, stimulating jobs that are far more appealing to tech-savvy young people.”
Dave: “What is the ultimate prize at the end of the automation journey?”
Mike: “Manufacturers that can effectively integrate A&R into their processes will find that they can achieve improved productivity and competitiveness leading to growth and greater profits, with colleagues working in more highly skilled and better paid jobs.”
Tim: “We’re seeing an opportunity to boost UK competitiveness by raising levels of investment in this kind of cutting-edge technology. Investing in A&R is a huge opportunity to bolster the long-term resilience and strength of UK manufacturers and the UK economy.”
See how Lloyds is supporting UK manufacturers to innovate, grow, and lead at lloydsbank.com/manufacturing
Lloyds and Lloyds Bank are trading names of Lloyds Bank plc. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 2065. Telephone: 0207 626 1500.
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Lloyds Bank Asset Finance, part of Lloyds Banking Group, is a member of the Finance & Leasing Association (FLA) and complies with the FLA Business Code of Practice. Further information is available from the FLA at www.fla.org.uk
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