Dave Atkinson, UK Head of Manufacturing SME & Mid Corporates, Lloyds Bank, considers new data that reveals manufacturers’ fundamental role in the UK economy.
A new report, The True Impact of Manufacturing, seeks to uncover the full extent of UK manufacturers’ contribution to the nation’s economy – and it makes fascinating reading.
Published by the Manufacturing Technologies Association and produced by Oxford Economics, the report takes a deep dive into decades of economic data to reveal how the sector’s impact is far bigger than is often appreciated.
Analysis states that manufacturers generated an estimated £184 billion in GDP during 2022, while directly employing 2.6 million workers; around 8% of the country’s total economic output and 7% of all jobs.
That’s impressive enough, but further investigation shows that the sector’s economic footprint is actually much larger.
Manufacturers support a network of suppliers, from food and drink to financial services, indirectly impacting all sectors of the economy.
That adds a further £164 billion and a further 2.6 million jobs to the manufacturing ecosystem.
And there is a third component known as induced impact; a measure of the amount everyone employed by manufacturers and their suppliers add to the economy when they spend their wages, which are 11% higher than the UK median average.
By combining the direct, indirect and induced effects of manufacturing, we get the true impact of the sector; £518 billion a year and 7.3 million jobs.
That means almost a quarter of the UK economy (23%) and over a fifth (22%) of all jobs rely in some way on UK based manufacturers.
Evolution and innovation
Manufacturing contributes so much more than just jobs and GDP, it’s a driver of future prosperity, accounting for 47% of all business R&D spend in the UK.
This innovative activity is happening in areas that represent some of the world’s most fundamental challenges, including health, defence and climate change.
As manufacturing becomes increasingly advanced, firms need practical and financial support to assist their evolution, or risk being left behind.
This requires a joined-up effort, which must include policymakers, trade organisations, business, academia, lenders and more.
We recognise that, as one of Britain’s biggest banks, Lloyds Bank can be an important piece of that puzzle.
So, we’re on the front foot, bringing organisations together to provide the resources that manufacturers, particularly SMEs, need to transform.
Central to that is our support of the Manufacturing Technology Centre (MTC) in Coventry, which we have backed with a £15m sponsorship through to 2030 to give the sector the much-needed confidence to plan long term.
Strategic support
This partnership has two main aims.
To help fund the MTC’s state-of-the-art training centre, creating a new generation of engineers and technicians who will help the UK realise its potential in advanced manufacturing.
And to support firms to transform their operations to be more productive, efficient and sustainable.
SMEs can access the MTC’s subject matter experts and advanced manufacturing technical engineers who can help address a number of challenges; from adopting the right technology to new process development.
We’ve also worked closely with the Manufacturing Technologies Association for 14 years, including sponsoring the flagship MACH Exhibition.
Lloyds Bank wants to lead by example, and it’s heartening to see others doing the same.
The Government recently announced a £4.5 billion support package for strategic manufacturing sectors, for example, while there are countless examples of universities partnering with manufacturers to support their innovation.
These are the kind of initiatives that create a more supportive UK-wide ecosystem for manufacturing innovation.
As this strategic collaboration becomes the norm, the true impact of UK manufacturing can become even bigger and better.
Find out more about Lloyds Bank’s specialist support for the manufacturing sector here.
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David Atkinson is UK Head of Manufacturing for SME & Mid Corporates at Lloyds Bank with 35 years’ experience in the banking industry.
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