The Annual Manufacturing Report 2014 shows that manufacturers have an increased level of optimism around the UK economy with 94% of respondents reporting that they are ‘very’ or ‘quite optimistic’; the highest figure since the survey began in 2008.
The Annual Manufacturing Report 2014 surveyed 182 UK manufacturers in Q4 2013 across five key areas: Economy, policy and risk; Finance; Automation; Skills; and ICT. The Report (AMR) was researched by The Manufacturer magazine (www.themanufacturer.com) and produced in association with Barclays, Zurich, Pera Training, eBECS and the Automation Advisory Board.
A full copy of the report can be downloaded here: www.themanufacturer.com/reports-whitepapers/
Economy, policy and risk
For the first time ever no respondents were ‘very pessimistic’ about the outlook for the economy. This increased optimism has been reflected in a focus on strategic growth with 82% of companies reporting new product development as a key business focus and 74% of companies revealing that they see international trade as vital to their future growth strategy.
“This optimism reflects a wider sense of confidence in the economy driven by Bank of England revised 2014 growth figures (from 2.8% to 3.4%), improving GDP and employment,” said Sophie Spink, head of government and industry affairs for Zurich’s UK General Insurance business.
The Government was also perceived as improving in terms of its management of the UK economy by comparison with previous years but there was a general consensus that manufacturers in other industrialised countries around the world (with the exception of Australia) received greater support from their governments. Nine out of 10 respondents believed German manufacturers received more support from their government than companies in the UK, while 81% felt that French manufacturers were better supported.
With optimism returning to the sector, access to working capital has become an increasing focus for manufacturers over the past 12 months. Over half (53%) of manufacturers’ primary financial objective over the year has been to increase cash flow while 58% of companies reported investing more in machinery/machine tools in the last financial year than they did the previous year.
Mike Rigby, Head of Manufacturing at Barclays, said: “This year’s Report further underlines the improving confidence in the manufacturing sector. More access to capital, investment in machine tools and new product development would strongly indicate growing order books and a strong desire for increased production capacity.”
In the last 12 months, half the manufacturers surveyed reported that their IT expenditure was at a level that was roughly the same as the previous financial year, with only a quarter (28%) reporting an increase in IT expenditure. Looking forward, the situation is more positive. Two thirds of respondents (67%) say that they plan on spending even more, next year. A further quarter of respondents (28%) anticipate spending around the same as last year. Put another way, only 6% of manufacturers, one in 20 in other words, actually anticipate spending less next year.
“In previous years, the voice of the customer has been paramount in driving IT expenditure, with respondents targeting investments on improved service, and increased price competitiveness,” said Stephen Wilson marketing director at eBECS. “And this year is no different with both drawing significant investment with a third of repondents citing them as pressures. But the overarching driver this year, in stark contrast to prior years, has been business growth, with forty-four per cent of respondents citing that as a driver for IT expenditure.”
More than three quarters (78%) of manufacturers reported implementing a form of automation into their manufacturing process in the last five years while more than 8 out of 10 respondents (83%) identified automation as a means to drive their business forward. Seven out of 10 respondents have implemented a major project in the last 2 years, demonstrating that investment in automation is currently a high priority for many manufacturers.
However, only around half of manufacturers reported having the appropriate in-house skills to run automation systems projects properly with the rest relying on suppliers or consultants. “This is not surprising as many projects can be quite specialist or innovative in nature and engineering skills within businesses have long been complemented by external resources,” said Steve Brambley, deputy director of automation trade association Gambica.
The prevailing issue of skills availability in the UK manufacturing industry was clearly apparent in this year’s Annual Manufacturing Report. The vast majority of firms (86%) reported having at least one outstanding recruitment requirement with almost half (47%) reporting vacancies of between two to four positions and more than a quarter (28%) of respondents report having over five positions available at the time of the survey.
Conversely, the fact that companies are looking to hire in such considerable numbers is an encouraging reflection of the overall economic outlook.
When it comes to training a third of companies (32%) offer on the job training to less than 10% of their workforce while 68% of companies provide accredited training to less than 1 in 10 workers. The risk of losing trained staff to other employers was also highlighted as an ongoing issue.
“With the increasing profile of Government funded Apprenticeship programmes, and the recently launched ESF funded Skills Support for the Workforce training programmes for SMEs, it would be expected that the amount of formal training would increase over the next 12 months in line with continued growth in the offering of Apprenticeship places,” said CEO of Pera Training, Richard Grice. “A resurgence in the uptake of Apprenticeships will still take many years to fill the highly specialist skills gaps that are shown to exist within the survey. The effect of this will potentially impact upon succession planning and competitiveness.”
A general lack of interest in working in manufacturing was highlighted as the most common issue when it comes to retaining staff.
“This lack of interest could be for any number of reasons but ensuring staff are appreciative of future career development opportunities and providing the opportunity to develop skills in multiple disciplines can help alleviate disinterest,” said Mr Grice.
Summing up this year’s Annual Manufacturing Report, report editor Tim Brown from The Manufacturer, said: “While the growth in optimism in industry was certainly tangible in this year’s report, as has been the case over the last decade, the skills agenda remains a top concern for manufacturers. Many companies feel that there is not enough being done to make manufacturing an attractive career choice and, while attracting staff is a continued issue, the risk of losing trained staff to other sectors was also highlighted as a cause for concern.
“Positively, many companies report that they are actively tackling the issue of skills by hiring young talent as well as by utilising new IT initiatives and automation to help improve productivity and quality.
“The overall results of this report demonstrate that the outlook for manufacturing in 2014 looks positive. We would hope that this means a strengthened overall economic outlook, a continued increase in government support for the sector, and a greater public profile in terms of the career prospects offered by the sector.”
About the Annual Manufacturing Report:
The Manufacturer magazine in conjunction with Barclays has released the 2014 Annual Manufacturing Report (AMR). The AMR reports on the findings of research conducted in Q4 2013 in the areas of: Economy, Policy and Risk; Finance; Automation; Skills; and ICT.
A survey was conducted for each of the different sections with a total of 182 responses collected.
A copy of the report can be downloaded here: www.themanufacturer.com/reports-whitepapers/
Alongside the data, the report features expert analysis from:
- Sophie Spink, Head of Government and Industry Affairs, Zurich’s UK General Insurance Business
- Mike Rigby, Head of Manufacturing Transport and Logistics, Barclays
- Stephen Wilson, Marketing Director, eBECS
- Richard Grice, CEO, Pera Technology
- Steve Brambley, Deputy Director, GAMBICA, The Association for Instrumentation, Control, Automation & Laboratory Technology
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