The Annual Manufacturing Report

Posted on 7 Mar 2013 by Tim Brown

Annual Manufacturing Report editor Tim Brown finds signals of renewed sector confidence in the 2012 industry research.

Investment in machinery and new product development are key priorities for UK manufacturers over the next 12 months, with 46% of manufacturers reporting they are ‘quite optimistic’ about the economic prospects for UK manufacturing in 2013.

The Annual Manufacturing Report (AMR), produced by The Manufacturer magazine in association with Barclays and eBECS, surveyed over 240 manufacturers in late 2012.

The report shows signs of increased confidence in the sector, with a considerable increase in companies seeking to spend more on investment activities. As seen over the past year and continuing into 2013, UK manufacturers are strongly focused on research and development in order to create new products. Over a third (36%) plan to increase spending in this area in 2013, and more than half (62%) of UK manufacturers will spend over £100,000 on machinery and tools this year.

Importantly, only 2% of companies reported an intention to spend less on new product development over the coming 12 months, showing manufacturers are looking to couple new product development with investment in new equipment to bring innovation to the marketplace.

In the last 12 months almost half of manufacturers increased their expenditure on IT, with 48% reporting an increase over prior year IT spend. This is a significant transformation from 2010, when only 13% of surveyed firms had increased their IT costs over the previous year. But compared to 2010 when only 6% of companies planned to reduce their IT expenditure, we see that 38% of companies are forecasting a cut in IT spend over the next year. Cost is reported as the biggest barrier to IT investment, cited by 53% of respondents, followed by lack of management buy-in, at 39%.

In many areas of the Annual Manufacturing Report 2012, the responses from manufacturers more closely reflect the pre-recession AMR figures from 2007/08. While the macroeconomic issues continue to have a negative impact on UK manufacturing, the perception of manufacturers is that the situation is improving.