UK manufacturers risk missing out on significant productivity gains from artificial intelligence unless urgent action is taken to address skills shortages and accelerate adoption, according to a new report from
Make UK.
Published to coincide with
London Tech Week, the report,
AI, Skills and the Future of the UK Manufacturing Sector, finds that while AI technologies are already beginning to improve efficiency and resilience, most firms remain at an early stage of implementation. Only 2% of manufacturers say AI is widely embedded across their operations, while fewer than 40% are using it in some areas and nearly one in five have yet to adopt it at all.
The findings come at a critical juncture for industry, with Make UK estimating that unfilled vacancies and digital capability gaps cost the sector around £6 billion in lost output each year. More broadly, the organisation suggests that widespread digitalisation could deliver a £150 billion boost to UK GDP by 2035. However, progress is being held back by a lack of skills and organisational readiness to move from pilot projects to full-scale transformation.
AI adoption is currently concentrated in back-office functions, with 83% of manufacturers using tools in areas such as HR, finance and administration. By contrast, uptake in core operations remains limited, with just 11% using AI in production, 7% in supply chain and logistics, and 6% in quality control.
The report notes that AI’s impact on jobs is, for now, relatively modest, with most applications focused on automating routine administrative tasks rather than replacing workers. However, nearly half of manufacturers expect AI to reshape roles and ways of working within the next two years. Rather than eliminating jobs, AI is more likely to augment them, driving demand for hybrid skills as employees increasingly work alongside data-driven tools.
Skills shortages stand out as the main barrier to progress, with more than half of manufacturers citing capability gaps as their biggest obstacle, particularly among technicians and operators. While businesses are prioritising practical competencies such as data literacy, problem solving and change management, many report that staff lack time for training and that there is limited clarity on what effective AI skills look like in a manufacturing context.
Nina Gryf, senior policy manager for AI and digitalisation at Make UK, said: “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.”
She added: “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.”
Make UK is calling for coordinated action from government, industry and education providers, including clearer skills standards, more practical support for SMEs and training designed to fit around factory environments.