I'm not going to spoil your enjoyment of the Annual Manufacturing Report 2019 by spilling all the detail here. But I do want to give you a flavour of what we discovered in this comprehensive overview of the sector’s state of mind in this critical year.
The Annual Manufacturing Report 2019 is split into five categories:
Smart Factory: which tested attitudes to the digital manufacturing technologies that have the power to transform manufacturing. (Sponsored by PwC)
Government Policy & Industrial Strategy: effectively Brexit, its likely consequences, and in terms of industrial strategy, reaction to the Made Smarter Commission and its launch of the North West Pilot. (Announced at last year’s Digital Manufacturing Week)
Skills & Training: this is all about apprenticeships, the Apprentice Levy and the education system’s ability, or otherwise, to provide manufacturers with the skilled recruits it desperately needs. (Sponsored by Autodesk)
Growth & exports: how confident are manufacturers that they have the tools they need to grow their business and grow their markets, particularly overseas? (Sponsored by Epicor)
Financing investment: it all comes down to cash, where to find, how to preserve it and what do to do with it. (Sponsored by Board International)
Inevitably, Brexit coloured the conversation more than a little. Industry let the government get on with it early in the negotiation process, believing the direction of travel was towards something reasonable that we could all live with outside the EU.
The fact that as you read this there is still the chance we might very well crash out of the EU without a deal means something has gone very wrong, and manufacturers are understandably resentful.
This dyspeptic attitude to government is evident across the board, even in areas where we are supportive of them, such as its Industrial Strategy. The North West Pilot is the most tangible evidence so far of the strategy as it affects manufacturers, designed to help smaller companies discover the growth-enabling powers of digital manufacturing technologies.
We discovered a gap between their undoubted enthusiasm for adopting these technologies and a significant lack of willingness to actually pull the trigger.
Here are some individual responses we got on this issue:
“Not sure what you mean by digital smart factory technologies. We have an ERP system and we have CNC/robotic machinery.”
“We are too small for it to be cost-effective.”
“It is an area that we discuss with clients in the SME sector and is something that many SMEs have vaguely on their radar but have no immediate plans to implement.”
“I am not sure what digital smart factory technology is.”
Obviously, there is a gap in understanding, if a manufacturer has adopted digital technologies and yet somehow is unaware of it!
And the general level of unawareness we detected means either that the message isn’t getting out, or it’s too clouded in jargon – or it’s the wrong message.
Either way, adopting digital manufacturing technologies will, for most companies, be the cornerstone of their future growth strategies.
We discovered manufacturers are pretty confident about having what it takes to grow, either in the home market or overseas, and they most definitely feel that the UK has the drive to be a successful manufacturing nation, confidence that may well be put to a brutal test in the coming year.
Going for growth
Lower exchange rates have a strong part to play in growth for those who see opportunities in exports, not so much for those who import raw materials, but the weaker pound (it was $1.40 this time last year and regarded then as very low; at the time of writing it is $1.30) is generally seen as an overall positive.
Encouragingly, manufacturers are using it to grow market share, not pocket some quick profits. There is still a belief that the government could and should do more to help exporters, even though they have significantly increased support for exporters in recent years.
Perhaps that’s just more Brexit backlash. Growth needs investment, and as last year’s report also showed, manufacturers are wary of borrowing through conventional banking channels, many preferring to use their own cash reserves to fund growth plans.
They like government incentives, such as R&D tax credits, but would also prefer a simpler tax system, a contention unlikely to find any disagreement, except perhaps among accountants.
Do read the Annual Manufacturing Report 2019 for yourself. It is full of useful data and insights and offers a snapshot of sentiment that can best be described as a curious mixture of grumpiness, disaffection and brilliant, go-for-it positivity. How very British.
I’ll end with the quote from Mark Wingfield, Managing Director of A&M EDM. It’s a clear illustration of a company that is making its own future, with confidence and courage. Not a bad example to follow.
“We are in a strong position financially, thanks to following a policy of consistent reinvestment of close to £6m over the last five years in machinery, factory infrastructure, R&D, apprentices and skills training.
As a private company we are able to reinvest profits; we also maximise R&D tax credits and have been successful in securing Regional Growth Fund grants as our investment in new machinery creates new jobs.
Through Sandwell Council, a partner of the Black Country Growth Hub (BCGH), A&M EDM secured a grant totalling £375,000, which enabled the business to invest nearly £3m in our new site.
Continuously upgrading our equipment, as well as expanding our premises to accommodate additional machinery and staff, has enabled us to stay ahead of the competition, and meet growing demand.”