Jonathan Newell discovers why Britain’s decision to leave the EU should not result in a paralysis of inaction in the country’s industrial sector.
The date of 23 June 2016 was destined to be a watershed with either the UK carrying on business as usual or making the historic and highly risky decision of removing itself from the EU after 43 years of unity. This wasn’t going to be an easy decision and it has left the nation divided in its support and uncertain of its future.
This uncertainty is being felt strongly in the technology sector, although the division is less pronounced than within the nation as a whole, with two-thirds of sector employees being in favour of remaining in the EU, according to a survey conducted by Juniper Research amongst UK and international technology employees.
Here, the overwhelming majority believe that leaving the EU will have a negative impact on the tech industry. The main reasons cited for this are that it would be harder to attract talent from EU countries, there would be reduced funding for UK technology firms from the EU and London would become less attractive as a technology hub.
Emotion over economics
It’s clear from the results of the referendum that the general view of the British public doesn’t reflect that of the technology sector and Juniper Research believes this to be due to poor awareness levels based on inadequate campaigning by the Remain camp.
According to the Juniper Research Head of Forecasting and Consultancy, Dr Windsor Holden, the Remain campaign organisers were thwarted by the nature and diversity of the reasons for the UK to remain in the EU.
“The Brexit campaign focused effectively on the emotive issue of immigration, whereas the combination of financial and economic issues which concern those who are wary of leaving the EU cannot as easily be encapsulated and communicated and therefore presented a real challenge to those seeking to engage with the public.”
Four Key Challenges
Regardless of the rationale behind the referendum result, the country now faces a new period in its history and this will be accompanied by a number of significant challenges, which Frost & Sullivan has boiled down into four key areas:
The UK as a technology hub: Innovative start-ups characterise a significant chunk of technology companies in the UK, all of which are striving to gain traction in emerging technologies in automation, driverless cars, communications technology and other aspects of the digital economy, as well as clean energy, healthcare, nanotechnology and other scientific and engineering disciplines.
According to Frost & Sullivan, the UK has so far been seen as a gateway to Europe by the tech giants of America and have been attracted by the culture of innovation in the country and the proximity to European markets. The research firm questions whether leaving the EU will result in its status as a hub of innovation being eroded.
A reduction in red tape: Modifications to the existing regulatory framework through EU Directives will create challenges particularly in the IT sector as it tries to determine where it stands within the catacombs of regulatory compliance. Whilst exports to the EU will continue to need conformance to EU regulations, the IT regulatory framework is more complex and new agreements will need to be forged relating to domestic compliance and the international digital arena, resulting possibly in similar agreements as the existing “EU-US Privacy Shield”.
However, test houses will know that any expectations of a relaxation in standards or the requirement for conformance are without foundation since export markets continue to demand the same accreditation and the UK is expected to maintain if not improve on them.
The process of withdrawal from the EU is expected to take two years and nothing will change in terms of meeting EU standards during that time. Existing standards certification bodies will continue to offer the same services and will continue to be accredited to homologate or certify against the same standards that they do today.
After a long period of decline in the decades leading up to the new millennium, Britain’s automotive industry has begun to recover to regain some of its former glory, in no small way been due to high levels of technological innovation in clean energy, connectivity – and most recently – automation.
Coupled with that, the country is home to some of the best automotive technology research and development centres in the world, such as Millbrook, the Transport Research Laboratory, Thatcham Research and HORIBA MIRA. The MIRA engineering test facilities and proving grounds are the home of a technology cluster which brings together some of the biggest and most prestigious names in the automotive industry not only from the UK but from the EU and beyond as well.
Political decisions and the status of Britain in the EU affect the future of the automotive industry profoundly since the supply chain, co-operative initiatives, the regulatory environment and technology development all cut across national boundaries in a very complex way.
We asked George Gillespie OBE, the CEO of HORIBA MIRA, what the implications of leaving the EU would be on his organisation. He told us, “Following the decision by the British general public to vote to leave to EU, we must now work together to ensure we continue the vibrant recovery that the UK automotive sector has experienced in recent years. As a business, we’re proud to have been part of that recovery and our focus is very much on working with our UK customers and suppliers to ensure growth within the sector continues.”
According to Ian Rippin of the CSA Group, a testing and certification services company specialising in the ATEX directive relating to equipment for use in explosive environments, “CSA will continue to provide ATEX certification and there is no indication that this will change during or after the withdrawal negotiation period.”
Access to funding: Negotiations need to take place to ensure that existing sources of investment funding, particularly for cash-starved start-up companies, do not dry up. Currently, the European Investment Fund (IEF) is the largest investor in UK venture capital firms and whether this funding stream remains in place, and for how long, is a major question mark.
Virtualisation technology company, Bromium is also concerned about funding drying up for research in the country’s academic institutions that drive much of the country’s innovation. Commenting on this, the company’s CTO and co-founder, Simon Crosby told us, “Over a third of research funding for universities in the UK comes from the EU. In the absence of new funding from the UK government, there will be a huge impact on university’s ability to deliver highly skilled tech workers to the UK economy.”
Access to skills: According to Frost’s “Post Brexit View of the UK High Tech Sector”, it needs highly skilled people to flourish and even the current ability to tap into EU resources still leaves shortages. Severance from the EU skills market could also be exacerbated by a loss of existing skills who return to Europe to find better opportunities there.
This view is also reflected by Bromium. Crosby continued, “The incredible technical talent in the UK just became a lot cheaper for foreign countries to hire. Sadly, they will suffer as their standard of living drops, and their opportunity to live and work in other countries in Europe is restricted. Ultimately, I expect many of them to leave the UK permanently for countries that will pay what they are worth, such as the USA.”
Leading the change
It is quite clear that high-tech businesses need to demonstrate the necessary leadership to succeed during the existing period of uncertainty and the future outside of the EU. There is no benefit in relying on the decisions of others and purely reacting to external influences.
Some of that leadership comes from industry bodies, such as the British Computer Society (BCS). Demonstrating its approach to the forthcoming changes, the BCS’ David Evans said, “It is absolutely essential that we support and grow our academic base, foster industrial collaboration and send a message out to the international academic community that we want to increase collaboration.”
Former Commander-in-Chief, Admiral Sir Trevor Soar summed up the approach needed by industry in the face of an uncertain future when he said, “When a major decision outside your remit is made resulting in confusion and doubt, the result can often be a paralysis of inaction. This is the time to step to the fore, provide leadership in the vacuum that exists and drive your programme forward.”
Building a professional skills base
Advanced engineering requires advanced skills and the Government is being urged to ensure there are no future skills gaps in the sector by investing in the development of home-grown skills immediately.
The Industry Apprentice Council (IAC) is one organisation at the forefront of the campaign and has been highly critical of efforts made to attract apprentices into the engineering profession so far. The organisation found that half of apprentices found their positions on their own initiative rather than through careers advice, 70% are unaware of Government apprenticeship targets and three-quarters want some kind of professional accreditation for the skills they acquire during their training.
To achieve the goals the IAC believe are needed to ensure the correct skills are available for future industry, it is proposing that a professional qualification scheme is used to ensure quality is maintained, careers advice is reformed, greater awareness levels of schemes are achieved and career paths are more precisely defined by future employers.
Commenting on the proposal, IAC spokesman, Ann Watson said, “Without apprentices, employers across the advanced manufacturing and engineering (AME) sector simply would not be able to meet their skills needs. With the economy needing 182,000 people with engineering skills every year through until 2022, apprenticeships offer a tried and tested way for employers to equip new recruits with the right skills.”
One sector that is highly skills dependent is the aerospace industry, a highly competitive arena that has a heavy reliance on large scale investment, an investment that one aerospace recruitment company fears could reduce if the country can’t demonstrate that it has the skills needed to fulfil its objectives.
According to Nicola Mannion, an aerospace and defence recruitment expert at JAM Recruitment, the existing workforce is getting older and there is a lack of investment for bridging the impending gap created by retirement. If international investment in the industry starts to dry out, local companies will look to make cuts in workforce spending.
However, she believes that there are opportunities for the existing skills inventory as competition increases and the most competitive companies look to recruit the brightest stars in the industry.
When asked where the billions of pounds that the treasury is expecting to become available should be spent, the co-founder of research and development company Agilent, Mark Le Masurier said, “Research, training and talent. Increase funding to science and technology, enhance incentives for SMEs to develop their staff and fund fast-track immigration of scientists and graduates into the UK. This, together with anticipated cuts in red tape, would increase prosperity in this new, post-referendum world.”