Deloitte – Made in the UK

Posted on 3 Dec 2009 by The Manufacturer

It has been a bleak 12 months for exports but UK firms expect this side of their business to now begin to grow, according to the latest manufacturing survey by Deloitte.

In the first of a new quarterly series called ‘Made in the UK’, Deloitte revealed only 30 per cent of UK manufacturers increased exports over the last year, despite the detracted value of sterling which analysts had expected to have a advantageous effect. Indeed, sterling’s low value against other currencies has seemingly had little benefit at all; the principle concern that UK manufacturers expressed to Deloitte over exports was their ability to compete internationally on price.

Exports remain a key part of UK firms’ strategies though, with 35 per cent of UK firms now exporting more than half of their total product. In addition, 55 per cent of UK manufacturers expect their exports to increase over the next two years.

And David Raistrick, Deloitte’s UK manufacturing industry leader, said the low value of sterling will still prove useful and the effects will begin to be felt as the US and large European countries pull out of recession and begin to order more goods.

“I think the industry will see an even higher percentage of manufacturers boost their exports over the next two years than our findings suggest,” he said.
The EU remains the principle export market for UK manufacturers, followed by North America and Asia, excluding China.

For imports, the EU is the main market once more, with 85 per cent of firms sourcing goods from the region. Chinese parts were only sourced by 41% of respondents and just 38% of manufacturers surveyed sourced some of their imports from North America. Overall, 33% source over half of their materials from overseas markets and over the past 12 months only 15% have decreased the proportion of materials sourced from overseas.

Thirty five per cent of manufacturers are now outsourcing production to a low cost economy.

“Our findings suggest that UK manufacturers have engaged more with Europe than they have with the US and Asia,” added Raistrick. “This contrasts with the US manufacturing model which has seen a greater amount of outsourcing to China. The fact that the bulk of our production takes place at home is not a bad thing, given that the UK is the 6th largest exporter of goods and related services in the world and that this industry still makes up almost 20% of UK GDP.”

Click here for a PDF and a podcast of the results.