The key ingredients for success

Posted on 5 Jul 2010 by The Manufacturer

Julian Hunt of the FDF hails a new IfM report which shows the food industry is flourishing.

A new report from the Institute for Manufacturing at the University of Cambridge has confirmed what I suspect many readers of The Manufacturer already knew: food and drink is a significant and resilient component of the UK manufacturing scene.

In fact, as the report’s authors confirm, ours was the sector that reduced its output least during the economic downturn and has returned to pre-recession output levels the fastest. While the index of production for all manufacturing is currently at 90 basis points, for instance, the food sector is at 99 basis points – a 1% difference on 2005 levels.

Those of you who have battled through recession in hard-hit sectors such as engineering will rightly say at this point that people always have to eat and that’s why food manufacturing will be more stable during any economic downturn.

That’s a valid argument – up to a point.

However, as any casual food shopper knows, we have witnessed unprecedented levels of competitive behaviour in the market over the past two years from retailers, caterers and wholesalers. At the same time, consumers have remained pretty cautious about how they spend their money – and food, like all other consumer goods, has experienced rapid shifts and changes in purchasing behaviours to which we have had to adapt.

In the face of this potential squeeze on their businesses, food manufacturers have responded by continued investment in their product development, in their factories and in their people.

On innovation it may surprise you to learn that the UK food industry spends as much on R&D as the automotive sector. But it’s in the people area where some of the biggest surprises emerge from the IfM report.

The image of work in the food sector is one of temporary and relatively low paid employment. But the IfM found that 94% of employees in the food and drink sector are full-time; they are paid well above the national average; and 20% of those employed by our members are graduates. Jobs in the food industry reflect our growing innovation base and our increasing productivity – and skills are rising accordingly.

Now, at this point I really must declare an interest. The report was commissioned by the Food and Drink Federation to explore the financial, strategic and social contributions of the UK’s biggest manufacturing sector. As the new Government builds the strategy for economic recovery, we believe this report is a timely reminder that our sector can form a key part of its thinking.

Clearly, there are challenges ahead: the report also reminds us that while exports of added-value foods have increased significantly in recent years (by 14% in the past decade), imports are rising faster. As the Government declares Britain to be open for business again, this insight raises some questions about why processing companies choose to locate food factories in other parts of the EU instead of the UK. And we are keen to have those discussions with Vince Cable and his colleagues in BIS.

On a brighter (and slightly contradictory) note, a survey carried out by the IfM among FDF members found our companies remained optimistic about the prospects for increasing their future investment in UK production, research and design in the next three to five years.

It appears, therefore, that our sector is well-placed to capitalise on the strong foundations that have been put in place. We are investing in our products, our factories and our people – and we are feeling relatively upbeat about the future. In fact, food manufacturing remains a genuine British success story. And I bet there’s not too many folk in manufacturing who can say all of that at the moment.

To download a copy of the IfM report, please visit our website: