Serving as the Toyota Wessels Institute for Manufacturing Study (TWIMS) faculty lead for this year’s Gordon Institute of Business Science’s (GIBS) MBA global immersion to the United Kingdom (UK) was a privilege. The UK module is part of the Manufacturing Focus MBA Programme. It took place from 4 to 13 October 2024. The objectives of the Global Module are threefold: to examine another country’s economy as well as its positioning in the global context, to visit and benchmark that country’s manufacturers and manufacturing support institutions and meet interesting and knowledgeable individuals who are passionate about manufacturing and its role in developing society. These trips, ultimately, allow MBA students to expand their horizons and allow them to reflect on their MBA journey and their present and future role as a manufacturing business leader within a global context.
This year, we focused on the UK’s western midlands, starting in Manchester, the birthplace of the Industrial Revolution, and engaging with leading academics at the Global Development Institute (GDI) and the University of Manchester. We visited world-class manufacturers like Toyota UK and British Sugar and explored future manufacturing trends at the Institute for Manufacturing (IfM), University of Cambridge.
The UK’s manufacturing sector differs significantly from South Africa’s. With an annual output of around $267 billion, manufacturing accounts for approximately 10% of the UK’s economy and employs around 2.6 million people. Despite its smaller share of the economy, the UK is a manufacturing powerhouse, producing around nine times more than South Africa with only double the workforce.
Our visit came at a time of economic stagnation in the UK. The country is grappling with stagflation, high inflation and slow growth. The UK entered a recession in late 2023, and while GDP rose 0.6% in Q2 2024, it remains only 2.3% above pre-pandemic levels, trailing the Eurozone and the USA. Inflation, which averaged 8% in 2023, appears to be stabilising. Additionally, the UK’s policy environment has seen uncertainty over the past decade following the 2016 Brexit referendum, which has had lasting impacts on trade and political stability. Since the Brexit vote, the UK has had six Prime Ministers in eight years. Liz Truss had a historically short tenure resigning in October 2022 after serving only 45 days in office!
Key Lessons from the UK
Lean Operations and Supply Chain Management Remain Foundational: Lean manufacturing is the foundation of the UK’s technological and sustainability advancements. Companies like Toyota UK excel in continuous improvement through their Kaizen approach. For example, Toyota UK’s Business Retention and Customisation (BRC) is an innovation introduced by the UK to remanufacture and customise vehicles. The centre’s business model is highly profitable as it rapidly refurbishes vehicles, with a quick turnaround, based on Toyota UK’s existing Just-in-Time Manufacturing model. The lean principles that drive innovation and advancement in the UK are the same foundational principles of Lean Manufacturing that are prerequisites to enhancing operational efficiency in South African firms.
Clustering and Open Innovation Provide an Ecosystem for Growth: The UK’s manufacturing ecosystem thrives on clustering and open innovation. Clustering allows for close collaboration between interconnected companies, suppliers, and institutions, as exhibited by Toyota UK, whose key suppliers are within 50km of its operations.
Open innovation in manufacturing refers to a collaborative approach where companies go beyond their internal research and development (R&D) capabilities and engage external partners such as other businesses, universities, and research institutions to develop new products, processes, and solutions. Despite the global sugar glut over the past decade with sugar supply outstripping demand and depressing global sugar prices; British Sugar’s financial performance has remained consistent due to its implementation of several innovations, including producing a wide array of co-products from its sugar beet mill. In addition to sugar, the mill produces co-products such as animal feed, topsoil, electricity, Limex (a liming product), bioethanol, and medicinal cannabis. British Sugar’s innovations have been facilitated by adopting lean factory management, which they learnt from companies like Toyota UK and from partnering with other companies, like Air Liquide and Jazz Pharmaceuticals, who have better expertise in marketing and selling the coproducts that British Sugar produces. British Sugar’s diversification into co-products is an example of open innovation and driving resilience, which is a strategy that could apply to South African agribusinesses.
Balancing Technology and Employment Requires Careful Evaluation of Costs and Benefits: UK firms are more willing to adopt technologies that may displace workers, understanding that efficiency gains often translate to long-term job creation due to increased market share and upgrading opportunities. For instance, Toyota UK has a fully automated metal stamping line in its factory manned by robots and Automated Guided Vehicles (AGV). British Sugar’s employees mostly focus on production planning and maintenance as the majority of sugar mill production is automated. In contrast to South Africa, where technologies are resisted if seen as job-destroying with the effects of constraining competitiveness and limiting our upgrading opportunities. However, these decisions in the UK are carefully evaluated through Payback Period and Return on Investment (ROI) analysis. In South Africa, where labour costs are relatively low, some technologies adopted in the UK may not be as investment attractive. Each technology decision requires careful evaluation of costs and benefits.
The Role of Industrial and Trade Policies to Enhance Competitiveness: The UK’s commitment to net-zero carbon emissions by 2050, with specific targets and incentives for manufacturers and society to decarbonise by 2030, provides a clear framework that encourages long-term investment in sustainability. Policy certainty helps firms like Toyota UK and British Sugar make informed product and energy transitions decisions. South African manufacturers could benefit from similar policy stability and incentives that promote innovation in green technologies.
Conversely, Brexit’s negative impact on UK exports highlights the importance of regional trade agreements and avoiding policy disruptions that could hamper growth. Some estimates suggest that Brexit will cost the UK economy between 4% to 5% in GDP losses per year over the next 15 years due to the increase in cost of trade to the EU. The EU is the UK’s largest export market representing 45% of its goods exported.
Inclusivity Requires Inclusive Leadership: A lack of racial and gender diversity remains a challenge in the UK’s manufacturing sector, with firms struggling to attract younger, more diverse talent. One of the firms we visited had 80:20 gender split in senior management in favour of males with only one person of colour in a senior executive role. South Africa faces similar issues, but firms that emphasise inclusive leadership and diversity are better positioned to draw from a wider talent pool.
In addition to exposing our students to the fun and social aspects of life in the UK, including partaking in punting and Pimm’s in Cambridge, the GIBS MBA global immersion to the UK reinforces the core principles of the Manufacturing Focus curriculum developed by TWIMS. Through firsthand exposure to cutting-edge technologies, lean manufacturing practices, and sustainability initiatives in leading UK companies, students were equipped with the tools and motivation to drive innovation, operational excellence, and inclusive leadership in South African industries.
In the future, we aim to expand our global immersion program to developing countries such as Thailand, Turkey, Egypt, Ghana, and Kenya. These regions provide diverse business environments and benchmarks, allowing our MBA students to experience different stages of industrial development and learn from developed and emerging economies.
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