Manufacturers risk AI productivity gains without urgent action on skills and adoption

The report, AI, Skills and the Future of the UK Manufacturing Sector, highlights how AI technologies are already helping manufacturers improve efficiency, productivity and resilience, but warns that most firms remain stuck in the early stages of adoption.

Despite growing awareness of AI's potential, only 2% of manufacturers say AI is widely embedded across their operations. Just under 40% are using AI in some departments, while nearly one in five have not adopted AI at all.

The findings come at a critical moment for UK industry. Make UK estimates the manufacturing sector loses around 6 billion in output each year due to unfilled vacancies and digital capability gaps, while wider digitalisation across the sector could unlock a 150 billion boost to UK GDP by 2035.

However, the report warns that many firms lack the skills and organisational readiness needed to move from small-scale AI trials to full business transformation.

Currently, AI use is concentrated in back-office functions, with 83% of manufacturers using tools in areas such as HR, finance and administration. Adoption in core operational areas remains far lower, with only 11% using AI in production, 7% in supply chain and logistics, and 6% in quality control.

The report also finds that AI's impact on jobs remains limited for now. So far, AI has mainly been used to automate repetitive administrative tasks rather than replace workers or fundamentally redesign roles. However, nearly half of manufacturers expect AI to reshape jobs and ways of working within the next two years.

Rather than eliminating jobs, the report suggests AI is more likely to augment existing roles and create demand for hybrid skills. Examples already emerging include maintenance engineers using predictive analytics, planners using AI-assisted scheduling tools and quality inspectors shifting from manual checks to exception management.

Skills shortages are identified as the biggest barrier preventing manufacturers from adopting AI more effectively. More than half of manufacturers say capability gaps are their main obstacle, particularly at technician and operator level.

The report found manufacturers are prioritising practical skills such as data literacy, problem solving, leadership and change management over specialist coding expertise. However, half of businesses say staff do not have time to train, while many remain unclear about what good AI skills look like for manufacturing roles.

Nina Gryf, Senior Policy Manager - AI & Digitalisation, Make UK, comments: "AI has huge potential to improve productivity, efficiency and resilience across UK manufacturing, but our research shows that many businesses are still at the experimentation stage and have yet to embed these technologies at scale. While manufacturers recognise the opportunities AI presents, too many are being held back by skills shortages, limited capacity for training and a lack of practical support.

"As London Tech Week shines a spotlight on the UK's AI ambitions, it is essential that manufacturers, particularly SMEs, have access to the tools, skills and guidance they need to adopt AI confidently and effectively. If we are to realise the full economic benefits of AI and strengthen the competitiveness of UK industry, government, industry and education providers must work together to support widespread adoption."