Skills gaps risk billions in AI productivity gains for UK industry
8 June 2026 
Only 2% of UK manufacturers say they have embedded AI is widely across their operations, while almost one in five have not adopted AI technologies at all, according to a new report from the manufacturers’ organisation, Make UK.
Currently, AI use is concentrated in back-office functions, with 83% of manufacturers using it in areas such as HR, finance and administration. Adoption in core operational areas remains much lower, with only 11% using AI in production, 7% in supply chain and logistics, and 6% in quality control.
Make UK argues that while AI could unlock billions in productivity gains for UK manufacturing, businesses are being prevented from realising its full potential due to skills shortages and low levels of adoption.
The report, AI, Skills and the Future of the UK Manufacturing Sector, highlights how AI is already helping some manufacturers improve efficiency, productivity and resilience, but warns that most firms remain stuck in the early stages of adoption.
The findings come at a critical moment for UK industry. Make UK estimates that the manufacturing sector is losing around £6bn in output every year due to unfilled vacancies and digital capability gaps. Wider digitalisation across the sector could unlock a £150bn boost to UK GDP by 2035, it predicts.
However, the report warns that many firms lack the skills and organisational readiness to move from small-scale AI trials to full business transformation.
The report also finds that AI’s impact on jobs is limited for now. So far, AI has mainly been used to automate repetitive administrative tasks, rather than to replace workers or to redesign roles fundamentally. However, nearly half of manufacturers expect AI to reshape jobs and the way they work within two years.
Rather than destroying 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 revealed as the biggest barrier preventing manufacturers from adopting AI more effectively. More than half of manufacturers say capability gaps are their main obstacle – especially at technician and operator level.
The report finds that 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 are not sure about what good AI skills look like for manufacturing roles.
To address these barriers, Make UK is calling for:
- nationally recognised AI skills standards for manufacturing roles;
- greater practical support for SMEs adopting AI, so smaller manufacturers can move from experimentation to implementation;
- flexible, shift-friendly training that works in factory environments;
- responsible, workforce-centred AI adoption that builds confidence and supports job quality;
- stronger support through programmes such as Made Smarter, alongside clear sector leadership to help manufacturers adopt AI at scale; and
- a strong role for the Advanced Manufacturing AI Champion to help translate national ambition into practical action, convening industry and government, identifying barriers to adoption, and accelerating the spread of proven use cases across the sector.
The report also calls for education and training providers to deliver more practical, manufacturing-focused AI training aligned with real industrial use cases. Make UK will expand its work through a new AI Skills & Adoption Working Group with government and industry partners to develop guidance, tools and case studies.
The report concludes that AI could boost UK manufacturing productivity and competitiveness significantly, but only if firms are supported in the move from experimentation to implementation.
“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,” says Nina Gryf, senior policy manager for AI and digitalisation at Make UK. “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.
“It is essential that manufacturers – particularly SMEs – have access to the tools, skills and guidance they need to adopt AI confidently and effectively,” she adds. “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.”
