Study reveals innovation potential across UK foundation landscape

Research from UKRI highlights metals, paper, chemicals, glass, ceramics and cement industries.

Research conducted by UK Research and Innovation (UKRI) shows that only 56% of UK businesses across six foundation industry sectors introduced new products and 53% new processes in the last three years, namely metals, paper, chemicals, glass, ceramics and cement companies.

UKRI commissioned the Enterprise Research Centre to undertake the research as it believes there is unrealised potential for innovation in the UK’s foundation industries.

Innovation rates in the UK’s foundation industries are lower than in key competitor countries, uneven across sub-sectors, and particularly weak in smaller businesses. Innovation activity was found to be linked to size, with larger companies more likely to have reported innovation over the past three years, and ambition, with companies desiring an appetite for further growth more likely to be innovators, the body says.

The study also shows that foundation businesses reported growth factors as their primary motivation for innovation, with increasing sales & market share (29%), competitive advantage (17%) and margins (15%) scoring highly. Conversely, non-financial factors such as regulation (8%), health and safety (6%), and customer demand (5%) were seen among less important drivers of innovation decisions.

The main constraints for not embracing innovation were found to be around risk (20%), the high costs of developing innovation (27%) and a lack of qualified personnel (24%). In fact, 60% of businesses said that underdeveloped management and leadership skills frequently or occasionally constrained innovation in their sector.

Collaboration between businesses to develop new innovations was found to be low among respondents, with just over half (51%) of companies in the foundation industry working with other businesses in their supply chain on new products and processes. 28% confirmed they were collaborating outside their supply chain. In addition, only a quarter (23%) sought external advice in support of their innovation activity.

Bruce Adderley, director of UKRI’s Transforming Foundation Industries challenge, says, ‘The foundation sector is mature, with large entry costs tending to limit new entrants. As result of this low level of churn, innovation and competition can be suppressed. Given this challenge, and the energy-intensive nature of the UK’s foundation industries themselves, it will take highly disruptive and transformational efforts across the sector to achieve the government’s net-zero obligations.

‘Our research has shown foundation industries to be distinctive in a number of ways and we believe that steps can be taken to inform policy, and increase engagement and much-needed collaboration - particularly among small businesses. We also want to encourage industry bodies and trade associations to use their position to play an increasing role in promoting and enabling innovation. With this support from within the industries themselves, we believe our role of helping develop and fund innovation will be a great force for lasting change.’