16 Jun 2024

Manufacturing resilience and optimism

UK manufacturing

It’s fair to say that the last few years have been a rollercoaster ride for manufacturers who have had to deal with the pandemic, the shock to energy prices from the Russian invasion of Ukraine, not to mention the continued challenges posed by new trade arrangements with the EU and the ongoing skills shortage. That’s before you factor in the domestic political chaos.

But there may finally be signs of optimism according to the findings of Make UK’s annual survey of over two hundred Senior Executives which is conducted with PwC. The overarching message is that Britain’s manufacturers are viewing the UK as a more competitive place to locate their activities compared to twelve months ago, with an increasing number believing they are moving ahead of their European rivals. However, the report also shows they remain wary of the huge threat to their competitiveness posed by the economic behemoths of the US, India and China.

The report also shows that at company level they are more bullish about the prospects for the manufacturing sector in 2024 with the vast majority of companies seeing opportunities outweighing the risks to their business.

Manufacturers are backing this belief up with investment in new products, expansion into new markets and taking advantage of the accelerating use of new digital technologies to improve their business. These commitments should be boosted by the recent positive announcements from Government on full expensing, the extension of the Made Smarter scheme and, the creation of an Advanced Manufacturing Plan which puts the sector firmly front and centre of efforts to boost growth in the UK.

However, the survey also shows that manufacturers are wary of the prospects for both the UK and global economies, while significant challenges remain in the faces of increased energy and employment costs, as well as access to domestic skills.

In particular, the survey shows that digital technologies have the potential to boost productivity with almost three quarters of companies believing digitising operations will boost their operational efficiency. In addition, more than half of companies see generative AI as a means to increase the productivity of their workforce, while a similar number will be leveraging cloud and emerging technologies to reduce their carbon emissions and support their transition to net zero.

However, not everything in the garden is rosy as, despite more optimistic prospects for the year, more than half of companies still see risks in increased energy costs closely followed by the impact of political instability which is probably now the new normal. More than two thirds are still seeing problems associated with supply chain disruption while a similar number see lack of access to domestic skills as a risk.

Company info: Make UK