How can UK manufacturers thrive amid current uncertainty?

Political and policy inertia, coupled with lack of clarity on the direction of EU exit negotiations, is affecting confidence in UK manufacturing.

UK Manufacturers - Uncertainty regarding the UK’s trading position with the EU is already holding back investment decisions by suppliers and buyers.
Uncertainty regarding the UK’s trading position with the EU is already holding back investment decisions by suppliers and buyers.

Steven Barr, John Burn and Dave Hogan – of The Manufacturer’s consultancy team Hennik Edge – look for inspiration from the past, and offer three strategies for manufacturers to thrive amid current uncertainties. 

We live in interesting, uncertain times. Following the EU referendum and two General Elections, UK manufacturers are no clearer on the nation’s strategy for industrial success at home or in overseas markets.

Pundits – and that’s all of us in a multi-media world – are not short of views on how our politicians got us into our current state and how they should get us out of it. But we shouldn’t wait for government to provide a map.

Manufacturing companies must create their own frames of reference and do everything they can to shape their future success. Our industry can and should learn from the landscape of businesses that thrived while others merely survived – or failed – in interesting times past.

Strategies for surviving and thriving

There’s no need for panic. The global economy is strengthening, in parts. UK manufacturing demand is at a 30-year high. Jobs increased in the first quarter of 2017, and unemployment is at its lowest rate for more than 10 years.

However, confidence in UK manufacturing continues on its rollercoaster ride. Uncertainty regarding the UK’s trading position with the EU is already holding back investment decisions by suppliers and buyers.

Skilled workers are becoming harder to attract, and those from Europe are reported to view UK employment as much less attractive since the 2016 vote to leave the EU; and export earnings boosted by the exchange rate won’t always outweigh increased costs of importing essential resources.

There are no direct precedents for the current economic and social situation, which poses particular challenges for manufacturers. The Economist published a detailed review of ‘strategies for surviving and thriving in turbulent times’, based on interviews with senior executives in manufacturing and other companies, large and small.

Their ‘turbulent times’ were the aftermath of the 2008 financial crisis, which also led to stifled investment, unpredictability and market disruption. These business leaders highlighted a number of changes they made in aspects of their businesses, contrasting the characteristics of ‘managing business as usual’ with ‘managing uncertainty’ (see table below):

Managing business as usual vs managing uncertainty

Agility in all aspects of business

In short, the secret to thriving in times of uncertainty, at least in the years following 2008, was agility in all aspects of the business. The influence of agility is a common finding in academic research on organisations; for example, in the widespread application of lean and six sigma principles (originally developed, of course, in manufacturing). ‘

‘Transformational leadership’ is a strong theme in academic research and many companies have adopted processes to shift from traditional methods.

There is a clear need for more detailed and up-to-date analysis of what has worked for UK manufacturers in the uncertain conditions of the past 10 years and more. We’ve picked out three strategies for success that manufacturers can adopt without waiting for government to catch up.

Engage with employees & partners to design future operations

Effective leadership starts with communication inside and outside an organisation. Employee engagement is a basic requirement. Companies can gain much more by tapping the ideas and knowledge of people with a natural incentive to drive the success of the business. By being honest about the vision and challenges ahead, buy-in actually increases and difficult choices are less disruptive.

Seek a broader perspective from suppliers, customers and peers

Businesses that look at themselves from the outside are better able to spot what needs to change inside as the world shifts around them. Suppliers, customers and non-competing peers all have something to gain from mutual support and continuous improvement, and from sharing understanding of new opportunities. Business culture needs to change to allow genuine cooperation and overcome contract-related constraints.

Take more risks, and manage them actively

Manufacturing is fraught with commercial risk in highly competitive markets, and this can lead to a tendency to over-analyse. We need to learn to live with incomplete data and think in terms of broad evidence of future scenarios. Don’t bet the company, but consider investments in enabling customer-focused capabilities such as digital technologies and product-as-a-service. And make sure you have identified all the risks facing you, and organised your business as far as possible to deal with them.

If agility is the secret to success in uncertain times, then collaboration is its key enabler. Collaborating means networking with contacts, communicating, cooperating, being collegiate and connecting resources.

Rather than waiting for government to step up, UK manufacturers need to take the initiative. Start by engaging with your employees and partners, then your suppliers, customers and peers.

The Manufacturer is a key resource for information and opinions. For example, our membership service The Manufacturer Collaboratory will be running Brexit workshops online to help you navigate that particular swamp.

For more details about The Manufacturer Collaboratory, click here.

How will EU exit impact your business?

Using The Manufacturer’s Quarterly EU Exit Survey, we have devised a simple but effective way of helping manufacturers to navigate the EU exit process as new information emerges.

By answering a few key questions, UK manufacturers can track their own progress and benchmark themselves against peers by size, location and sector.

If you are a UK manufacturer you can take part in our Quarterly EU Exit Survey via The Manufacturer Collaboratory by following the link: Take the survey – bit.ly/TMCqueue