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|Could - or should - robots be taxed?||25/04/2018|
As automation increasingly encroaches on traditional forms of employment, many governments around the world have been grappling with the consequences. The "left behinds" have been a strong influence in recent elections and the rise of populism.
The world's first robot tax was introduced last year in, of all places, South Korea. The tax was created amid fears that a rise in automation and robotics was threatening human workers and could lead to mass unemployment in the country.In fact, this so-called robot tax was not actually a tax at all. Calling it a tax was simply rhetoric delivered by its opponents. Essentially, it was just a revision of existing tax laws: the country limited tax incentives for investments in automation, lessening the existing tax breaks for automation.
But is this the way forward? At Drives and Controls, Toshiba Machine partner TM Robotics was displaying advanced machine vision systems for automating bin-picking. Managing Director Nigel Smith rightly argues that slowing down the machine economy would lead to a productivity disaster. Automation levels in the UK are low enough as it is, without a further factor slowing down investment. Green shoots of increased automation are just emerging, and this is particularly evident in the food and beverage industry.
Most manufacturers and those operating in the robotics sector would disagree with the idea of a tax on robots, the debate does raise questions of how we tax employment in Britain — and how technology could affect this. The obvious fear at Government level is that if we replace people with robots, we reduce national insurance contributions, lessening a Government’s ability to support its people.
But if automation creates new, different jobs, then perhaps none of this would be needed? The bottom line is that robots create jobs, they don’t take them away. . Humans and robots are actually good at different aspects of the work. This is supported by the UK Government’s recent Made Smarter review on digitalisation in industry. The review concludes that over the next ten years, automation could boost UK manufacturing by £455 billion, with a net gain of 175,000 jobs.
The key is to ensure that the jobs created by the wealth that automation brings are higher value jobs than the ones replaced. Above all, the wealth created by automation must not end up in the pockets of a small number of "mill-owners,” but must be distributed into the industrial sector and the community.
So taxing robots would be a tax on net job creation. Instead of implementing a tax on robots, we should arguably be providing tax breaks for companies investing in robotics.
Andy Pye Consulting Editor
|The limits to automation||07/03/2018|
The robot revolution hasn't happened at the pace predicted two decades ago, but it is coming, and rapidly. Computer power, big data, improvement in sensors, vision technology and speech recognition are challenging the role of humans in many professions.
The current demand for robots is three times greater than 10 years ago. The range and type of robots is no longer limited to welding cars or lifting heavy loads. A Panasonic factory with the assistance of robots has been producing two million high-end TVs a month, with only 25 employees.
An added factor is manufacturers re-shoring. This is a reversal of the 20th-century policy of transferring operations to lower labour cost and tax-attractive countries. In the future, AI robots will make it attractive for corporations to return to their original base.
The surge in robot sales has seen the emergence of four major suppliers, two Japanese, Fanuc and Yaskawa, the Swiss/Swedish concern ABB and Germany's Kuka AG.
Recognising this, in 2015, China devised a plan to become the leader in several industry sectors, including medical, aerospace, energy, and robotics. The Robotics Industry Development Plan is a five-year plan to rapidly expand its industrial robotic sector. China wants to be able to manufacture at least 100,000 industrial robots per year by 2020 and for the majority of robotic orders in China to be fulfilled by indigenous manufacturers. To further the goal, electronics appliance company Midea purchased Kuka.
“China can manufacture simple robots, but nothing like the six-axis models of Japan, Germany, and the US,” says Zi Yang, a China analyst from the Jamestown Foundation in Washington, DC. “It’s hard to close the gap, mainly because of lack of innovativeness, weak intellectual property laws and government-led projects that focus on quantity over quality.”
Even today, much of the UK’s media coverage on the subject focuses on the threat that automation poses to jobs, as opposed to the productivity benefits. Studies suggest that automation could affect one in five jobs in the UK, but, that doesn’t necessarily mean the technology will replace human workers. The UK Government’s Made Smarter Review, finds that a greater uptake of industrial digitalisation technologies (IDTs) could represent as much as £455 billion growth for manufacturing in the next decade, creating 175,000 jobs and increasing productivity by 25%.
Automated equipment is capable of extremely complex and challenging tasks that humans cannot possibly achieve. However, there are still things that humans can do far better than robots can.
One way that humans triumph over robots is in their capability to make decisions. Additionally, because humans can think and act more flexibly, they are often better problem solvers. Moreover, many industries rely on creativity, something that would be missed in a company run entirely by robots.
|Predictive maintenance pushes technology boundaries||31/01/2018|
Few things can damage the financial stability of a manufacturing facility more than unexpected downtime. On average, manufacturers suffer with 30% or more downtime during their scheduled production time. However, there are ways to reduce the risk.
The automotive industry has long been at the forefront of applying new automation technologies, but the industry is also at the forefront of industrial network modernisation. Downtime can cost up to £17,000 per minute.
Traditionally, industrial maintenance has been done on a fixed schedule, replacing items at constant intervals. Constant intervals do not take into consideration the unique circumstances of a machine being maintained, so although general purpose schedules are convenient from the viewpoint of ordering spares, they risk wasting money by replacing parts that are still operational.
Predictive maintenance, on the other hand, aims to get the most life out of equipment while minimising the risk of failure. Increasingly, it involves gathering large quantities of data. While some of this will be existing data, such as maintenance or warranty records, adding data sources such as sensors on the equipment will also be important to build the big picture.
One of the biggest challenges is gathering and interpreting unstructured data, such as free text in maintenance records, design specs, test data from failed equipment, or even comments on social media or Google searches. The most intelligent data analytical automation software will also provide graphical visualisation of production data and generate customised statistical reports.
Having collected all the data, the next step involves using data analytics to make sense of the data, and then figuring out predictive rules that will become the basis for a predictive maintenance model. Once the model is built, it must be tested and progressively refined. But a bad model is better than no model, albeit only marginally – and with progressive refinement via a continuous learning loop the model can be updated based on on-going results. For example, if a component fails after being used for a specific product run, pattern recognition can identify the stresses that are unique to that run that could have caused the failure.
Inside AWNC, the Toyota transmission plant in North Carolina, a recent upgrade includes a new MES, inventory management, predictive maintenance and quality systems that transmit all data for collection and analysis over a secure, Cisco-enabled Wi-Fi network.
According to test and measurement company HBM, video use is accelerating in data collection. Video cameras are already used in many test and measurement applications in addition to data collection with traditional tactile sensors.
“There is no longer any question that recording video data in parallel to tactile sensors or digital bus signals is becoming more and more attractive to users,” says Christof Salcher, Product Manager Instrumentation at HBM. “Video supports traditional sensor data and is becoming a valuable source of additional information.”
|Technology too hot to handle?||15/01/2018|
Productivity growth in the UK will continue to stall without Government and industry action to tackle a digital skills deficit in small businesses, according to new research from the Federation of Small Businesses (FSB).
The digital skills gap is part of a wider skills challenge hitting small firms. The research finds a third (30%) of small businesses in England, which have tried to recruit in the year since the Brexit vote, have struggled to find workers to fill roles because of acute skills shortages. Skilled trade jobs, including electricians, IT engineers and construction workers are most affected as the labour market remains tightly squeezed.
“Productivity is being hampered by nagging skills shortages which are making recruitment a nightmare for small firms," Mike Cherry, FSB National Chairman. "As the UK moves towards Brexit, a technical skills black hole threatens the economy. Small firms also tell us that technical skills are crucial to the future growth of their businesses. The clock is ticking to tackle the ever-widening skills gap.”
FSB has found that over a quarter (26%) of business owners in England lack confidence in their basic digital skills and more than a fifth (22%) believe a lack of basic digital skills among their staff is holding them back from increasing their digital and online presence. It warns that small firms will be left behind unless the National Retraining Scheme, announced in the Budget to boost digital capability, is designed with them in mind.
Despite clear evidence that better digital capability spurs growth, a quarter (25%) of small firms do not consider digital skills to be important to the growth of their business. That is why FSB believes demonstrating the benefits of digital to these firms will be critical.
“If we can harness the digital potential of small firms, we stand a real chance of creating more world-beating businesses and boosting growth. We know that embracing digital technology can help businesses in every sector to be more productive," says Cherry. "Firms risk being left behind unless they have the skills to take advantage of technology to remain competitive and responsive to their customers. We need to highlight the benefits of going digital and then make sure that small businesses and their staff can access basic digital skills training that meets their needs through initiatives like the National Retraining Scheme.”
However, the number of tech employees has not increased along with the number of jobs available. Why? The answer is simple: lack of relevant education. The White House maintains that just one quarter of K-12 schools offer high-quality computer science with programming and coding. In addition, in 2016, the PEW Research Center reported that only 17% of adults believed they were “digitally ready.”
Coding has always been regarded as a mysterious field, something Derek Lo, co-founder of the new application “Py”, wants to change. Launched in 2016, the application offers interactive courses on everything from Python to iOS development. The “unique value proposition,” as Lo puts it, has been a revolutionary success. The fun-oriented application has so far resulted in over 100,000 downloads on both iTunes and Google Play.
Py focuses on high-level concepts, recognising that coding will become less about memorising basic syntax and more about high-level understanding of what’s really going on. Programming languages have morphed from low-level (shifting bits and allocating memory) to high-level (abstract data structures and functional programming), from obtuse (assembly, machine code) to human friendly (Python, Swift).
- ‘Learning the Ropes – Skills and training in small businesses,’ 11 December 2017
- On behalf of FSB, independent research company Verve surveyed 1,023 small businesses in England about skills and training between 14 August and 1 September 2017.
- Businesses were asked about recruitment in the “last year”, meaning this 12 month period refers to August 2016-August 2017
|The road to zero overtime||23/11/2017|
Nidec, the Japanese company which acquired motor drives companies Control Techniques and Leroy Somer from Emerson Electric, is aiming to become a ¥10 trillion company by changing the way its employees work.
Speaking to the Yomiuri Shimbun, a Japanese newspaper published in Tokyo, Osaka, Fukuoka, and other major Japanese cities. CEO Shigenobu Nagamori, chief executive officer of Nidec, expects radical changes in the way Japanese - and by extension global - workers operate.
Nagamori notes that before around 1980, iron was the backbone of Japanese industry. Subsequently, semiconductors became that backbone. He expects that around 2025, it will be the turn of the electric motor. Motors are replacing engines as the main generators of power. Europe and China are shifting gears toward electric vehicles, while some experts even think that by 2050 there will be three times more robots than people by 2050.
In the 2000s, Nidec accelerated its acquisitions of overseas companies. It was then that Nagamori noticed something he found surprising. Employees in the West do not work overtime. German companies even take a full month of summer vacation. And still they turn a healthy profit. In the United States, people leave work at a fixed time, and then go to school at night to get an MBA. Employees involved in engineering work learn about business and administration, so they can be company managers.
Their productivity is simply on a different level. He realised that Japan’s way of working is fundamentally wrong. What really matters is the nature of employees’ work, rather than how long they work.
He wants Nidec to become a ¥10 trillion company by 2030, and because there are only 24 hours in a day, regardless of company size. he believes that if Nidec clings to its current way of working, it will stall at the level of ¥1 trillion.
So Nidec began with having supervisors ask their people to leave the office at a set time: overtime decreased by 30%. Today, overtime at Nidec is almost half of what it used to be.
The company educates employees in training centres on company premises. Work focusses on their English language skills and their expertise. Improved skills lead to increased performance. The salaries of employees won’t be reduced. We will do this over the course of five years.
Nagamori says that Nidec has hired about 6000 people since it was established, and he has seen no correlation between people’s academic background and their work performance. "It’s education that’s important," he says. "Education changes people drastically."
Even so, Japan has few people with good management skills. The reason why is there is no system for the professional development of managers. In the United States, people become company managers in their 20s. Outstanding talent doesn’t go to large corporations but to venture companies. In Japan, even graduates of top universities must start as low-ranking employees. Then they can become chiefs and managers. They’re in their 50s by the time they can finally become executives, but by that age, you can’t manage a company anymore.
So what lessons does this hold for the UK? The approaches to company development are poles apart from those in the USD, Germany and - as we see here - in Japan. We know we have crippling shortages of engineers and other key workers, and this will be exacerbated by making it harder to recruit them from overseas sources.
It will take time, investment and a radical appraisal of our approach to business management. How effectively can we compete on a global stage without first addressing these issues with the kind of vision that this Japanese chief executive is showing?
Andy Pye Editor
|More robots are coming||17/10/2017|
In the middle of September I visited Rittal at Herborn near Frankfurt in Germany (see page 48) and was fortunate that it coincided with the launch by the International Robotics Federation (IFR) of its "World Robotics Report - industrial robots - outlook 2020."
According to the IFR, by 2020 - that is no more than two to three years away - more than 1.7 million new industrial robots will have been installed in factories around the world. Today, the strongest growth in the robotics industry is in Asia – led by China as the world´s number one marketplace.
In terms of units, it is estimated that by 2020 the worldwide stock of operational industrial robots will increase from about 1,828,000 units at the end of 2016 to 3,053,000 units. This represents an average annual growth rate of 14% between 2018 and 2020.
China has significantly expanded its leading position as the largest market (with South Korea second) with a share of 30 percent of the total supply in 2016. With sales of about 87,000 industrial robots China came close to the total sales volume of Europe and the Americas combined (97,300 units). Chinese robot suppliers continued to expand their home market share to 31% in 2016.
Important drivers of this development are faster business cycles and greater flexibility. Robots can work around the clock, offer high levels of precision and improve worker health and safety by performing dangerous and unergonomic tasks.
As system complexities and data incompatibility are overcome, manufacturers will integrate robots into factory-wide networks of machines and systems. Analysts predict a rapidly growing market for cloud robotics in which real-time data collected by sensors attached to robots is compared to data from other robots in the same or different locations. Ultimately, the advent of big data in manufacturing could redefine the industry boundaries between equipment makers and manufacturers.
"Robots offer high levels of precision and their connectivity will play a key role in new digital manufacturing environments,” says IFR President Joe Gemma. “Increasing availability enables more and more manufacturers from companies of all sizes to automate.”
With a density of 1,261 installed robots per 10,000 employees, the United States ranked second in 2016 after the Republic of Korea. Germany is the fifth largest robot market in the world and by far the largest in Europe. The annual supply and operational stock of industrial robots in 2016 had a share of 36% and 41% respectively of total robot sales in Europe.
And in the UK? How much are we investing in order at least to keep the productivity of our regional and international competitors in sight? According to other sources, our investment in robotics is the lowest of the major European economies and we rank just above Thailand in the population of robots per 10,000 employees.
|Build it & they will come||31/08/2017|
More and more industries are ripe for automation. While manufacturing automation is well down the line, the automation of domestic duties receives much attention, and driverless cars and trucks are being trialled, below the radar, other industries are also exploring the benefits.
Agricultural vehicles have been at the forefront of developing and adopting autonomous navigation technology. Indeed, more than 320,000 tractors equipped with auto-steer or tractor guidance were sold in 2016 alone, expected to rise to 660,000 in 2026. These tractors use RTK GPS technology to autonomously follow pre-planned paths with centimetre-level accuracy. This makes agriculture the largest adopter of autonomous navigation.
The machines are still not completely reliable despite the technology being ready and accessible at the discrete component and software level. All this is predicted to change in the coming decade. Thus far, only a few field trials have taken place and here the experimental clock is inevitably limited by harvest seasons, further slowing down the adoption process.
Asparagus is one of the most expensive vegetables in Europe because harvesters have to painstakingly pierce each stalk individually. A robot could change this, and engineers at the Bremen Centre for Mechatronics (BCM) are developing one. It works with harvesting tools, which run on precision rails from HepcoMotion, a specialist in linear guidance systems.
The construction industry has begun the adoption of automation and robotics, with numerous projects underway to encourage use of the technology, such as the retrofitting of autonomous solutions into existing forklifts and diggers. There are clear advantages to incorporating automation technologies into construction, including uniform product quality, accuracy, speed and safety. Research is focusing both on the automation in existing machinery and on the development of new technology and robots for on-site and factory-based automation. As well as improving worker safety, increasing levels of automation could help overcome the shortage of skilled construction workers.
In parallel with agricultural automation, part of the challenge in adopting robotics comes from the unstructured and often unpredictable nature of construction sites, in contrast to more structured manufacturing production lines.
The increased use of modern methods of construction has led to the potential to manufacture off-site. Housing units or modules can now be manufactured in a controlled factory environment away from the construction site. The modules can then be transported to the site for final assembly. Swiss prototype robot bricklayer, In-situ Fabricator, can build a house in just two days.
In the United Kingdom, off-site manufacturing has received support from international engineering enterprise Laing O’Rourke, who is currently in the planning stage of an advanced manufacturing facility that will be used in commercial projects. Construction and manufacturing group, CCG has also created a manufacturing facility in Scotland that has the capability to manufacture 3000 buildings per year.
Off-site manufacturing can entail volumetric 3D units that are produced and fully fitted away from the construction site. Once they arrive, the modules are then stacked onto the building foundations to begin the building process. Chinese 3D printing pioneer WinSun claims to be able to print 10 houses in just one day using its innovative technology. These developments, however, are yet to become mainstream.
Collaborative robotics could see construction workers operating alongside robots in both factories and on the construction site to increase productivity and modernise construction.
|The road to digitalisation||29/06/2017|
Suppliers to manufacturing industry are queuing up to promote their respective views on the implications of digitalisation.
In the last month the automation equipment supplier Mitsubishi Electric hosted journalists at their UK headquarters in Hatfield for the launch of a 28-page whitepaper called Industry 4.0 - The road to digitalisation in future manufacturing. It sets out to explain the background, consider the challenges and offer approaches to the adoption of I4.0 related technologies.
The benefits which I4.0 can deliver for industry – and thus ultimately for consumers – include lower costs, faster production, better resource efficiency, higher quality control and greater product and component traceability.
The two key enabling technologies that should allow I4.0 to deliver benefits are the Industrial Internet of Things (IIoT) and cyber-physical systems. The IIoT enables multiple devices (as simple as a single sensor or as complex as a machine tool) to exchange data using Internet and Ethernet based technologies.
Cyber-physical systems are integrations of computation, networking and physical processes - the convergence of business systems with the physical plant control systems and machines. It is also about measuring actual performance against an “ideal model” - or norm - with a range of new initiatives.
While the paper works through issues of time-sensitive networks (determinism), developments in applicable standards, an interesting chapter - especially in the context of the UK's global trading ambitions - deals with the current and future state of I4.0 in various nations: China, Germany, India, Japan, Korea, Switzerland, Taiwan, the US and the UK itself. Along with India and Japan, the United Kingdom is relatively ill-prepared: a recent survey undertaken by consultancy BDO and the Institution of Mechanical Engineers found that only 8% of a sample of engineers in management or director level posts in UK industry had a ‘good understanding’ of I4.0 and 56% had ‘little or no understanding’. Only a fifth of responding companies had some form of I4.0 strategy in place.
In mitigation, the UK government has established ‘high value manufacturing catapult centres’ across the UK and these centres have taken on a role as thought leaders and proponents of I4.0. It has already announced plans to establish an Institute for Coding to support digital skills.
Earlier in the month, Swedish bearings manufacturer SKF brought a collective of European journalists to London for a summit on the company's position on digitalisation.
"Further digitalisation of established technologies such as condition monitoring and smart sensors could have a revolutionary effect on manufacturing," said Bernie van Leeuwen, director product management digitalisation at SKF. "The ability to collect and manipulate vast amounts of digital information will catapult manufacturing into the future."
SKF has been monitoring equipment remotely for around 15 years, and now has around a million bearings connected to the Cloud. Data from them is gathered and interpreted daily. The ability to handle this data leads to enhanced analytics – allowing SKF to detect earlier potential failures in rotating equipment that affect overall equipment reliability and to get a better understanding of critical product and system design requirements.
The ‘connectivity’ of the data runs in all directions, and can be used in many ways. At its simplest, it connects a sensor to a remote diagnostics centre. However, the data – on the health of a bearing, for instance – can be fed right back to the design stage, and used to help redesign a better product.
Increased digitalisation has also begun to allow more customised manufacturing. Because it can cut machine re-setting times close to zero, there are fewer restrictions to making customised products. Recently, the owner of an aluminium mill required bearings that would allow increased output – through a higher rolling speed – as well as lower maintenance costs and the elimination of unplanned downtime. SKF was able to produce four-row cylindrical roller bearings – complete with optimised surface properties and customised coatings – to boost service life and robustness, as well as designing out product cost.
|There's always be a human (while there's a warehouse lane....)||15/05/2017|
Last year, the World Economic Forum said that more than seven million jobs were at risk from advances in technology in the world’s largest economies over the next five years. The Bank of England’s chief economist, Andy Haldane, however, set out an even more concerning path. He said that up to 15 million jobs in Britain alone are at risk of being lost to robots.
A Chinese delivery warehouse in Hangzhou, Zhejiang province, recently hit the headlines after a mesmerising video of its little orange robots sorting parcels went viral. Showcasing these cushion-sized robots darting around the large warehouse at speed, it highlighted how close technology has come to performing tasks currently undertaken by human workers.
But Phil Chesworth, managing director at Midland Pallet Trucks, rebuffs the idea and underlines the importance of humans in the workplace. “While it’s true that robots can perform some tasks just as well as humans, relying on robots and technology for every aspect of a business could be detrimental. Simple, repetitive processes will usually provide a place for robots to shine, but when processes get more complex, this is where robots fall flat,” he says. “Unlike robots, humans can create, form relationships, and respond to out of the ordinary situations should one arise. Building relationships with suppliers and customers, and being able think on their feet is something only conscious humans can do.”
The lower the labour cost in an economy, the lower the incentive to automate, which may go some way to explaining the relatively low take-up of robotics in the UK. Even so, robots are starting to appear in unfamiliar surroundings, including agriculture and construction, where they may hold part of the answer to impending Brexit-related labour shortages. But they will do nothing to help the demographic imbalance in the UK, whereby a large, active younger workforce is needed to contribute taxes to fund the pensions of the older members of society.
Equally concerning is that Britain’s economy has shifted more towards low-skilled jobs and less towards high-skilled ones compared with other European countries, according to Oxford University research. The findings, which admittedly cover 1996-2008, show that the long-term pattern of jobs growth in the UK, as in most other European countries, has resembled an hourglass: the share of mid-skilled jobs such as secretaries and machine operators, has been squeezed by technology and globalisation, while the share of low-skilled jobs — for example, shop assistants — and high-skilled jobs, such as managers, has expanded.
But the research paper argues that process has played out differently in the UK than in many of its neighbours. For every 10 middle-skilled jobs that disappeared, about 4.5 of the replacement jobs were high-skilled and 5.5 were low-skilled. In Ireland, the balance was about eight high-skilled to two low-skilled, while in France and Germany it was about seven to three.
“In the replacement of those middle level jobs, the UK has shifted far more towards lower-skilled service work than lots of other European countries,” said the paper’s author Craig Holmes, who is an academic at Oxford and a research associate at the Centre on Skills, Knowledge and Organisational Performance.
|The Rules of State||04/04/2017|
As I write this piece, negotiations between the UK and EU on the former's proposed departure are two days into a 720 day cycle.
So far, even in this short time span, we have seen the Engineering Employers Federation (EEF) and the Society of Motor Manufacturers and Traders (SMMT) strongly argue for Single Market Access, while the VDMA, the powerful association of German manufacturing industries, has warned there should be “no unilateral concessions” in favour of the UK.
Thilo Brodtmann, VDMA executive director, called for Brexit negotiations to be held swiftly, saying, “We must not run the risk of having no agreement in place two years from now,” when talks come to a close. But he said preserving the single market among the remaining 27 EU member states was more important to VDMA member companies than keeping access to the UK market, a position which contradicts a commonly expressed Brexit position that "they need us more than we need them".
Recently, the UK Industrial Strategy Green Paper, has also been published, designed to provide the foundations on which it is intended that the UK's future industrial success will be built. A coherent industrial strategy makes perfect sense, and all nations - and trading blocs - should have one.
Regrettably, we cannot get away from what Briefing Paper Number 07682 readily acknowledges, that our future industrial strategy is inextricably linked to Brexit. "In common with many areas of Government policy, industrial strategy could be radically altered by the UK’s decision to leave the EU," it states. "Aspects of industrial strategy that could see significant risks and opportunities from Brexit include state aid rules, trade, investment, and research."
The Government’s green paper states that the Government will welcome an agreement to continue to collaborate with European partners on major science and research and technology initiatives. It adds that procurement policy will no longer be constrained by EU law. EU State Aid Rules do indeed strictly prohibit most instances of financial support from Government to failing or threatened industries. But in practice, what would leaving the EU really mean?
The UK will be a member of the EU until negotiations have been finalised. Until the UK’s formal exit, State Aid rules will still apply, and one assumes throughout any transitional period.
Beyond that, the extent to which State Aid rules will apply will depend on the nature of the relationship with the EU that is negotiated. If the UK were to became a member of an outer shell, like Norway, Switzerland, Iceland or the Ukraine, then State Aid rules would still apply since they are broadly replicated in the relevant agreements. If the UK negotiated an unique trade deal with the EU, then the likelihood is that some form of State Aid rules would still apply since the EU would probably require some form of state aid control – and vice versa.
But even if the UK were to leave without entering into any formal relationship with the EU, then theoretically, no form of State Aid controls would apply to the UK Government, and it would be free to provide any assistance to industries. However, the paper says, "various factors" mean that the UK Government would be unlikely to begin subsidising failing industries - not least that in recent history, the UK has been averse to providing direct financial support to failing industries. And even as a member of the World Trade Organisation (WTO), the UK is bound by the WTO Agreement on Subsidies and Countervailing Measures, which restricts the use of subsides, although less stringently than the EU State Aid rules.
It is hard to see what constraints we are working so hard to free ourselves from. Perhaps a more relevant question is why it has taken Brexit to bring the need for an industrial strategy to the fore. It should be a core KPI of any successful economy and it is long overdue.
Andy Pye is Consulting Editor of Controls, Drives and Automation. He also owns the online publishing business Carousel Web, which publishes in the security, health, defence and advanced materials sectors.
In a publishing career spanning back to 1980, Andy has edited many of the leading UK manufacturing and engineering titles, including Design Engineering, Engineering and Industrial Technology. In 1999, he was a Founding Partner and Shareholder of Pro-Talk, the ground-breaking online publications company which was sold to Centaur Media in 2006.
Prior to a career in publishing, Andy graduated in Natural Sciences, specialising in Metallurgy and Materials Science, and worked for a materials engineering consultancy. Outside publishing, Andy consults on the business management of recreational sports clubs and has worked for the Kent Cricket Board and England and Wales Cricket Board. Approaching 60, he still plays and coaches cricket!