United Kingdom
Is it back to business as usual for UK Manufacturing? – Tom Lawton
With the fog of the financial crisis lifting perhaps attention can begin to turn back to the more productive sectors of the economy. Our latest edition of Manufacturing Advantage discovers that companies’ ambitions and strategic priorities have not been knocked off-course by the global recession.
The global challenge
Produced in partnership with EEF and based on a survey of 300 companies, this report shows UK manufacturers have demonstrated their agility in responding to the challenges of increased global competition and tapping into new market opportunities.
One of the main themes that have emerged from our survey is that companies do not necessarily expect activities to return to ‘business as usual’. The recession has caused manufacturers to review their supply chains, locations and workforce - but this does not sound the death knell for manufacturing as we know it in the UK. The shift in focus as companies concentrate their efforts on preserving skills, process improvements and cost reductions, combined with the UK’s inherent advantages in global value chains, should mean that an innovative and competitive manufacturing sector should emerge from the ashes of the recession.
However, our survey shows that UK manufacturers expect the balance of growth to be tilted towards the emerging markets, especially in Asia, where China and India are seeing much faster growth with the low-labour cost economies providing an attractive proposition and opportunity to diversify activities and reduce cost.
Despite this challenge though, our survey highlights that manufacturing activities remain firmly rooted in the UK for a large proportion of companies. Indeed the results reveal that, some companies have returned production to the UK in the recent period.
The Future of UK Manufacturing
In the face of this dynamic industrial landscape, UK manufacturers continued adaptability is proving to be one of their main strengths. Our survey indicates that companies plan to establish more of their sales and distribution functions to other regions, retaining core services such as innovation within the UK.
Despite a more fragmented supplier base, fewer firms have reported difficulties in managing across geographical borders, as manufacturers have diverted resources to IT and supply chain management.
But, even with the landscape changing, the UK business environment will continue to support companies’ efforts to increase innovation and high-value good services. As we have mentioned in previous reports, the UK Government will have to do more to support the manufacturing sector, particularly in creating a more manufacturing focused, competitive tax system, developing a more coherent approach to industry support and pushing further on a better regulatory system.
If you would like any further information, please contact Tom Lawton, Head of Manufacturing at BDO LLP.