With the economy still yet to make the recovery many were hoping for, BDO surveyed nearly 1500 engineers and manufacturers to further understand the current state of manufacturing and more importantly, the actions needed to make UK manufacturing a key part of the economy for the next decade.
Despite an understandable underlying pessimism about the current economic situation, we were encouraged that nearly three-quarters of respondents felt the economy would improve over the next decade, with most believing that manufacturing would also account for a larger percentage of GDP.
However, in order to deliver this growth, the government needs to change the short-term nature of current politics and develop a longer term strategy to rebalance the economy towards manufacturing. Manufacturers and engineers are clear that a revamp of the education system is required in order to develop the skills needed for the sector. Despite its possible difficulties the respondents also called for more “patriotism” when awarding large UK Government funded contracts.
As expected, access to funding continues to be one of the key problems for the sector, particularly for SME’s with just 6% of respondents believing banks currently provide enough support. There was widespread support supported for the establishment of an “industrial bank” as well as the Government being more innovative in how it provides funding support to the sector to provide an alternative to the banks.
Unsurprisingly, rising energy and commodity prices remain a huge issue, with two-thirds of those surveyed looking to implement energy efficiency measures to help mitigate the costs. However, the resilience and innovative spirit of the industry continues to shine through: two-thirds of companies actually view the increasing use of green products as an area of opportunity for their businesses and plan to develop new product lines to take advantage of the new trend.
The current economic conditions will undoubtedly make recovery difficult over the decade covered by this survey. In this very different new world where developed economies may not be allowed (by the debtor countries) to continue to increase already unsustainable levels of borrowing, exports will be a key factor in returning countries to some level of balance and sustainable position. Although much reduced in scale over the last thirty years the UK still has a well regarded manufacturing sector that is seen to deliver innovation and quality and the ability to sell into the global market.
This survey shows that engineers and manufacturers believe that UK manufacturing has a future within the UK and should continue to be successful over the next decade but also that the sector needs long term, consistent and planned help to achieve its full potential. Although Germany is the most prominent example, many countries have managed to build a long term plan for their manufacturing sector that rises above election based politics and establishes manufacturing as a fundamental of the economy and we think that the UK needs to do the same. If there was one over-riding message from the survey and comments received it is simply “words are not enough”.
16 May 2012
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