What’s keeping UK manufacturing business owners and decision-makers awake at night?
Government’s handling of Brexit, the national technical skills shortage and a lack of awareness from the general public.
71% of UK manufacturers say Brexit is damaging strategic-planning and business prospects
- 64% say Brexit will cause chaos for the manufacturing sector
- 55% say the government could do more to promote exports
- 57% say the education system is a disaster for industry and needs a total overhaul
- 66% say the British people do not understand the importance of manufacturing to the economy
- 81% say they are ready to invest in new digital technologies to boost productivity.
The Annual Manufacturing Report 2019, published today by Hennik Research, has revealed that UK manufacturers are frustrated at the lack of certainty in the UK economy ahead of the 29 March Brexit resolution deadline, saying it is severely impacting their ability to plan for the future.
Following an extensive survey of UK manufacturers, nearly two-thirds, 64%, predict chaos for their business in the coming year thanks to Brexit. Furthermore, investment decisions are being delayed as uncertainty grows, just at a time when the government-sponsored campaign to encourage investment in digital manufacturing technologies is getting into gear.
The report’s author, The Manufacturer’s Editorial Director Nick Peters says, “It isn’t that manufacturers don’t trust the extraordinary power and potential of these technologies – they manifestly do, but they are following a familiar narrative established over previous decades and successive governments: they hesitate because they detect a lack of national economic purpose from the centre. This extends to the poor performance of the Apprentice Levy, which remains unreformed despite its obvious failings.”
The Annual Manufacturing Report 2019 has five sections: Government Policy & Industrial Strategy; Financing Investment; Skills & Training; Growth & Exports; and Smart Factory.
1. Smart Factory: Huge potential, but clear strategy and strong leadership required
The sponsor of the Smart Factory section of the report, which measured attitudes to the potential of digital technologies, is PwC. Their Industrial Manufacturing & Automotive Leader Cara Haffey says it is not just Brexit uncertainty that is causing many manufacturers to hesitate over investing in technologies that could transform their businesses.
“Aside from the obvious issue of investment, what’s holding companies back from digital investment?” she says. “The main blockers appear to be a lack of coherent digital strategies and the inability for organisations to understand what practical applications some of these technologies offer within their organisation. Indeed, the Made Smarter Review, 2017, cites an inability to understand what ‘good’ looks like as one reason for low adoption rates among UK businesses.”
2. Government Policy & Industrial Strategy: Faith in government policy is weak but sector resilience solid
A heavy majority of manufacturers say their strategic planning is being put at risk, and many believe manufacturing will be plunged into chaos by Brexit. Of course, we cannot know what will happen post-March 29, which is precisely the problem: no-one knows.
The Manufacturer’s Nick Peters says, “Perhaps the statistic we should take most comfort from is the overwhelming belief among manufacturers – 77% of them – that we have the drive to succeed as a nation. That self-belief should serve us well – it must serve us well – in the year ahead.”
3. Skills & Training: Manufacturing employers are hungry for skilled engineers, but a lack of them is causing indigestion
The sector faces a further crisis in the form of a looming skills gap, with older members of the workforce retiring and an insufficient number of properly trained young people emerging from the education system.
The situation is so bad that companies are now establishing their own training schemes and academies.
The sponsor of the Skills & Training section is Autodesk. Asif Moghal, Senior Industry Manager, Manufacturing Business Strategy & Marketing at Autodesk says, “How much more evidence must there be before it is accepted the current approach to our national skills issue is not working? The fact that industry is developing its own home-grown solutions is saddening but simultaneously motivating, because it could be the basis of a bold new way forward.”
4. Growth & Exports: Growth is not a nice-to-have, but a business basic
When it comes to business growth, particularly through exports, manufacturers still believe there is potential for growth overseas and a strong majority, 77%, say UK manufacturing has the drive to make a success of it.
The sponsor of the Growth & Exports section is digital solutions provider Epicor Software whose regional vice president, UK and Ireland, Mark Hughes says the future of manufacturing lies in the right people working with the right systems. He also believes Brexit offers an opportunity long term.
“There is nothing worse than uncertainty,” he says. “Despite this, the performance of the British manufacturing sector is on an upward trend. The ongoing digitisation of the sector has a key role to play in this growth as manufacturers are realising the potential of Industry 4.0. Brexit actually has the potential to bring significant opportunities to British manufacturing. It used to be more cost-effective to outsource various elements of the manufacturing process off-shore. Current and future technological advances mean that now more than ever before, on-shore is a truly viable option and “Made in Britain” will be key to helping Britain stay on top.”
5. Financing Investment: Investing in uncertainty in an age of doubt
The Annual Manufacturing Report makes it clear there is still a hangover from the crash of 2008, with manufacturers reluctant to seek bank funding for investment. A majority, 64%, say they prefer to finance investment from their own resources rather than borrowing.
The section on Financing Investment is sponsored by the business intelligence solutions company Board International. Their Manufacturing Lead Alan Bagnall says, “As always, the Manufacturer’s Annual Report provides valuable insights for the manufacturing sector. With uncertainty being the only certainty right now, it is clear that innovation and technology that enables timely strategic decision-making is vital.”
The author Nick Peters is available for telephone interview on 07986 764525.
About The Annual Manufacturing Report
Since 2008 The Manufacturer’s Annual Manufacturing Report has taken the pulse of British industry, from steelmaking to chemicals, automotive to aerospace, plastics to prototyping, and beyond. If you want to know what the country’s manufacturers think of government policy, the economic situation (home and abroad), prospects for investment, the skills gap, education, professional support or the effectiveness of IT, the Annual Manufacturing Report is essential reading.