Recovery from the pandemic is undoubtedly the manufacturing sector’s biggest challenge in a generation. However, it will also create the opportunity to build back better, as Ben Carpenter Merritt explains.
The COVID-19 pandemic has affected our lives in ways that no one could have imagined six months ago. While much of the economy ground to a halt, the manufacturing sector continued to work, providing the goods needed to support frontline workers and keep the country going.
Many manufacturers shifted production to respond to increased demand for medical supplies and personal protective equipment. Some turned their skills to produce in-demand items that they may never even have heard of before.
Others came together to participate in the Ventilator Challenge led by the High Value Manufacturing Catapult’s Dick Elsy, the impressive industrial alliance formed at short notice to meet the country’s demand for ventilators.
Image courtesy of High Value Manufacturing Catapult
Although government acted quickly this spring to support industry with the Furlough scheme protecting thousands of jobs, many firms now see redundancies looming as the scheme reaches conclusion.
Sadly, the recovery from this pandemic in manufacturing is unlikely to be V shaped (a rapid recovery from a rapid decline), as many economists had hoped.
Even when consumer confidence rises, many industries will see a significant lag in demand for their products and for some, any rises in orders will come too late to save them from collapse.
The road to recovery
Make UK’s latest Manufacturing Monitor report found that more than half of all manufacturers plan to make redundancies in the next six months, suggesting a serious upcoming contraction within the sector.
Make UK also found that while 99% of manufacturers are still openly trading, more than 45% have seen a drop in orders, ranging between 26% and 50%.
This article first appeared in the September issue of The Manufacturer. Click here to subscribe
In addition to this, numerous sectors will take longer to return to full production as their markets have been severely depressed by the pandemic.
Obvious examples are the automotive and civil aerospace sectors, however even manufacturers supplying the service industry, such as events companies, all face long roads back to pre-COVID levels of orders.
Build back better
The UK is experiencing the greatest contraction in its economy since 1955 – greater than any nation in either the G7 or the EU – and it will need support to recover. It is important, however, that government does not just look to get the sector back to where it was but looks at how it can support it to build back better.
Those in Westminster must help the sector to return, greener, more efficient and more secure in supply, while also looking for opportunities to re-shore industry where practical.
In late May, The Times reported that the Prime Minister had instructed civil servants to draw up plans for ‘Project Defend’. This project will focus on identifying and then securing critical supply chains to ensure the UK is not over dependent on individual countries for supply of certain goods.
Rosa Wilkinson, Director of Communications at the HVM Catapult speaks at the Manufacturing Commission’s last inquiry Level Up Industry. Image courtsey of Policy Connect
Although an important and welcome step, re-shoring certain core supply chains will not fully restore resilience to the UK manufacturing sector as it relies heavily on global trade and much of it always will.
It is therefore imperative that government understands the pressures and the opportunities facing the whole sector as it looks to secure the future of British industry.
Building the sector back better will require a comprehensive understanding of the industry so that any interventions can be targeted and effective.
In the first instance, government should explore how it can support the sector to achieve net zero carbon emissions by 2050.
This will involve prioritisation of energy efficiency and consideration of how industry can be more resource efficient by building circularity into the way we do business.
Ben Carpenter Merritt speaks at the Manufacturing Commission’s last inquiry Level Up Industry. Image courtsey of Policy Connect
Finally, it will mean looking at the role technology can play in increasing efficiency and competitiveness, both within the sector and also against our international peers.
All of this will mean working closely with businesses, listening to their experiences and creating practical and actionable policy solutions to the challenges facing industry today.
However, none of this will be possible without the right structures for investment, skills and taxation to help industry make these changes.
Key action areas
This is why I am delighted to announce that the next inquiry by the Manufacturing Commission – chaired by Lord Bilimoria and supported by Enginuity, the High Value Manufacturing Catapult and the ERA Foundation, will be looking into what action government needs to take to support industry and build back better in the wake of COVID-19.
The inquiry will cover key areas relating to sustainability, competitiveness, government support and future technologies, and will hold evidence sessions around the country, hearing directly from manufacturers about their experiences and what they need to drive the economy out of this recession.
In the country’s hour of need, manufacturing stepped up and answered the call. As we look beyond the pandemic and begin to focus on the recovery from the recession, government must make good on that commitment and put manufacturing at the centre of its plans to build back better.