05Conclusions and recommendations

Summary

The AMRC is at the core of a cluster of high-skilled exporting work that benefits the local and the national economy. A total of 499 advanced manufacturing jobs in the private sector exist on the site, and manufacturing firms from all over the country and the world are engaging with the Sheffield City Region, not because it is a producer of steel, but because it is a producer of knowledge.

The AMP reinforces the importance of place as a means of integrating the other foundations of the Industrial Strategy. Rather than intervening in specific sectors, to improve national economic performance, the Government should support places where knowledge is created and flows. Likewise, local government should work to improve the capacity of local economies to create knowledge.

The AMP, as an expensive place to locate, is distinct from the rest of Sheffield City Region’s economy. Instead, it more closely resembles some of the business parks in local economies with stronger skill bases, more knowledge spillovers, and more success in attracting high-skilled exporting work. If Sheffield City Region does manage to improve its appeal to such work, the cost of locating in the city region will increase, but firms will be prepared to pay this premium to access a labour market with more valuable skills.

Other places considering advanced manufacturing sites, such as Tees Valley, Sunderland, and Glasgow, should recognise the importance of ideas and the co-location of high-skilled work to the AMP’s success. Local universities should be involved from the beginning, and research results should be made accessible to other participants on the site. In addition, for these new advanced manufacturing sites to successfully play a role in improving local productivity and wages, low-cost mass manufacturing should be prevented from locating on these sites.

Policy Recommendations

The National Government should:

• Encourage other advanced manufacturing parks to replicate the AMRC’s university partnership and open-source research model. The collaboration and knowledge-sharing that the AMP offers is a critical element in its appeal to firms. A similar approach to research and university participation should be encouraged on other advanced manufacturing sites under development, particularly those receiving public money.
• Expand the AMP and other advanced manufacturing estates in response to demand. The cumulative public investment required to establish the AMRC and AMP as they are today was £140m. This can be justified as part of a National Industrial Strategy. However, there is a risk that if many more advanced manufacturing sites are established there will not be enough demand to justify the investment they will require. Due to the highly specialised and skilled nature of the work that takes place on the AMP, a “build and they will come” approach will struggle to succeed. The creation and expansion of more parks should only take place with Government support provided there is sufficient interest for more sites from the private sector.
• Devolve the Adult Education Budget to metro mayors. Sheffield City Region is in the best position to understand the skills gaps in its economy and to work with local providers and employers to address them. But the devolution of skills budgets from central government remains incomplete, including in Sheffield City Region. The Sheffield City Region devolution deal should be completed, unlocking access to control of the adult education skills budget in Sheffield.
• Increase the intensity and application of R&D. Government is already committed to working with firms and academia to spend 2.4 per cent of GDP by 2027 on R&D. Although the increased funding is essential, equally important is maximising the impact of national and local interventions. The evidence gathered by the What Works Centre for Local Economic Growth on innovation initiatives shows that there is good evidence that R&D grants, loans, and tax credits improve innovation. But this same evidence base also indicates that the application of R&D by firms in different places is uneven.¹¹ Ensuring not just that innovation increases overall, but that firms in cities across the country can tap into national initiatives like the AMRC, must be a priority for the Government in its attempts to solve Britain’s productivity puzzle.

Local Government should:

• Support the knowledge economy and exporting jobs as a whole, rather than one specific sector. The success of the AMRC does not come from advanced manufacturing alone, but because it provides the right environment and skills for knowledge-intensive firms to collaborate. In the context of local industrial strategies’ goal to increase productivity, cities should focus on providing the characteristics this activity requires rather than on any one sector in particular. Not every city will be able to have its own AMP, but they can all improve their capacity to house high-skilled exporting work broadly. This means focusing on horizontal policies that drive growth: skills, planning
  and transport.
• Enable diffusion of innovation. The AMRC’s value as a national asset is in how it improves the productivity of the firms it partners with through R&D. For Sheffield City Region and other areas of local government, helping local firms connect with the AMRC and similar assets elsewhere is local industrial strategy. This implies a convening role for local government in identifying local manufacturing firms which have the potential and desire to engage in R&D and helping them to do so through institutions like the AMRC.