UK manufacturers solving productivity puzzle

Small to medium-sized manufacturers in the UK appear to be getting to grips with the country’s long-standing ‘productivity puzzle’, according to a new report out today.

Productivity Puzzle - More than 60% of UK SMEs recorded an increase in turnover, 4% up on the previous quarter and 13% up on the same period last year - image courtesy of Advanced Chemical Etching (ACE).
More than 60% of UK SMEs recorded an increase in turnover, 4% up on the previous quarter and 13% up on the same period last year – image courtesy of Advanced Chemical Etching.

More than half (52%) of the 270 SMEs questioned in the National Manufacturing Barometer say they have increased productivity over the past six months, with over two-thirds (68%) expecting another performance boost between now and the end of the year.

The survey, conducted by SWMAS Group (part of the Exelin Group) in partnership with Economic Growth Solutions (EGS), also revealed renewed optimism among firms, with 61% recording an increase in turnover…4% up on the previous quarter and 13% up on the same period last year.

There was also a 7% rise in the number of manufacturers that have recruited (44%), while investment in machinery and new technology has remained the same.

Managing director of Exelin Group, Simon Howes explained: “Productivity never seems to be out of the media spotlight at the moment, so it is pleasing to see that SMEs are showing signs of bridging the gap…perhaps showing the larger firms how it is done.

“52% of respondents tell us they have either achieved an increase or significant increase over the last six months and this may be contributing to the upbeat sales and recruitment figures we are also seeing.”

Howes continued: “The National Manufacturing Barometer is painting a positive picture yet again, defying early rumours of a slowdown in UK manufacturing. Don’t get me wrong, there are challenges on the horizon and we still need to fully see how the Brexit negotiations are going to play out.

“However, what manufacturers are telling us is that they are not sitting back and seeing what might happen, they’re out there fighting to win new work, creating new jobs and finding answers to the productivity puzzle.”

Productivity was the special focus of this quarter’s National Barometer, with companies also asked to outline some of the key challenges they face when looking to solve the ‘puzzle’.

More than half (54%) of SMEs cited skills and expertise as the biggest hurdle holding them back, while exactly half said workforce efficiencies. Available machinery and supply chain efficiency were viewed as other difficult areas preventing performance increases.

Companies were also asked about barriers to employing new talent, which unsurprisingly was topped by ‘lack of industry specific skills’, ‘geographical location’ and ‘pressure of paying higher salaries’.