Despite the decline since the 1970s, when manufacturing contributed 25% of UK GDP, the UK is currently the ninth largest manufacturing nation in the world.
Overall, the UK’s industrial sector has increased by 1.4% a year since 1948, according to a recent report from the Office for National Statistics (ONS).
The ONS attributes the sustained growth to a better quality; more skilled workforce; a shift in production from low to high productivity goods; improvements in automation and technology; increased investment in R&D, and a more integrated global economy.
According to EEF, UK manufacturing currently:
- employs 2.7 million people
- contributes 10% of GVA
- accounts for 45% of total exports
- represents 68% of business research and development (R&D)
- provides 14% of business investment
Upcoming UK events from The Manufacturer:
- The Manufacturer Connect: De-risk your IT investment – 5 October, Sheffield
- The Manufacturer Leaders Conference: Your digital manufacturing toolkit – 15-16 November, Liverpool
- The Manufacturer Smart Factory Expo: The UK’s biggest showcase of digital manufacturing – 15-16 November, Liverpool
- The Manufacturer Top 100 2017: Report launch – 15 November, Liverpool
- The Manufacturer MX Awards 2017: Gala Dinner and Awards Ceremony – 16 November, Liverpool
Although the contribution of manufacturing to GDP has declined on paper, many of the services provided to manufacturers which would have once been considered part of manufacturing – such as catering; cleaning; building services, security and so on – are now allocated into different areas of the economy.
However, those contributions are directly reliant on manufacturing for continued business and could actually be considered as a part of manufacturing’s GDP input. As such, many are calling for the true value of manufacturing to be recognised, a move which would see the widely cited figure of 10% of GVA almost doubling to 19%.
Countries by manufacturing output using the most recent known data:
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UK Balance of Trade:
Key findings from the Annual Manufacturing Report 2017:
The Annual Manufacturing Report 2017 (AMR), published by Hennik Research, reflects a surprisingly resilient mood among UK manufacturers; surprising that is to those who haven’t been paying attention.
Two-thirds of respondents stated that they were aware of ‘Industry 4.0’; moreover, a significant proportion of respondents were either already undertaking a move to Industry 4.0 (23%), or were planning to do so (62%). Likewise, two-thirds had made investments in automation in the past 12 months, and significant numbers professed an understanding of servitization.
Perhaps predictably, the most widespread application for factory connectivity is human-machine interfacing (HMI), used by 68% of respondents. Almost as many – 64% – take the next logical step in connectivity, connecting sensors, and 68% connect to alarms in order to respond more quickly to out-of-nominal conditions.
While the 52% of respondents reporting connectivity to programmable logic controllers (PLCs) might not be especially surprising, the percentage of those reporting connectivity to motors and actuators (32%), and robotics (28%) can certainly be regarded as a welcome bonus.
Economy, Policy & Growth
Once again, there was no overwhelming response that government was doing a particularly good or poor job at supporting the sector. However, it is worth noting more respondents felt it had been a “moderately poor” effort. When offered a choice of several external factors which had the potential to affect their business, unsurprisingly 64% of respondents highlighted “European political uncertainty” as having had an adverse effect. Additionally, and equally predictably, 61% indicated that the skills shortage was taking its toll, and more than a third (39%) cited energy prices as having an adverse external impact.
The health of UK exports is of paramount importance to economic growth and respondents would appear to agree, with 63% calling it “vital” to the future of their business.
Similar to the private sector, manufacturers were less than happy with the support of membership organisations. Respondents were most happy with their local chambers of commerce, professional institutes like EEF and IMechE, and trade institutions such as SMMT, with around one-third saying they had helped somewhat.
Finance & Investment
The rising cost of energy and raw materials, as well as the potential cost arising from the uncertainty of Brexit, all rated as key concerns for many respondents. A large number report “increasing sales” and “decreasing costs” as the focuses for their business, going forward. An undeniably positive note characterises the mood with respects to new technologies, with the continued investment interest in automation, additive manufacturing and factory connectivity showing manufacturers are looking forward with confidence.
Probe the detail of such investment plans, however, and financial concerns become clear. While two-thirds of respondents invested in automation over the past 12 months, most of them will consider self-funding for such future investments. External funding, either commercial or non-commercial, is less popular as a result of concerns over tightening creditability. Interestingly, when questioned, manufacturers regarded all the key services offered by a finance provider as equally important, suggesting that they see finance as a packaged bundle.
This year, it is immediately clear that manufacturers are bullish on the value of investments in IT. Some 71% of respondents said that they had spent more on IT than in the previous year, a record expression of confidence that is only equalled by the findings of the Annual Manufacturing Report 2014. Looking at the past three years together, unprecedented numbers of manufacturers have spent increased amounts on IT. Overall, 88% of respondents reported spending more or the same as in the previous year, leaving just one-in-eight reporting that their business actually spent less.
When asked what form, precisely, did this investment take, ERP dominated – as it has in previous years – with 42% identifying it as their top investment priority. Other specialist software came next, identified by 29%, including CRM, CAD, business intelligence and unspecified niche applications. Hardware was again a priority, with some 13% of manufacturers expecting to invest in some form of new hardware over the coming 12 months.
Training & Skills
An overwhelming proportion of respondents, close to 70%, stated that they struggle to recruit experienced and skilled workers, and nearly 40% experience problems hiring managers. Almost 50% didn’t see filling unskilled positions as a problem, whereas 23% reported “significant” struggles recruiting apprentices.
Despite the paramount importance of training and development, almost 40% said fewer than a quarter of the workforce received annual formal, accredited training and development, and 30% said this figure was fewer than half. Management, communication and technical skills were all cited as being the competencies firms found the most difficult to enlist and train within the workforce; with those same manufacturers underlining the roles of engineer, technician and sales as being the greatest challenge to fill.
Statistics by sector:
British Aerospace at a glance
- 128,000+ direct jobs // 140,000 indirect jobs
- £31bn annual turnover
- 30% productivity growth in the past five years
- 39% growth since 2010
- 18% global market share – largest in Europe and second globally to the US
- 90% of turnover to export markets – worth £26bn
- Almost a decade’s worth of work in hand, with an order book of more than 13,000 aircraft worth up to £195bn to the UK
(Information courtesy of www.adsgroup.org.uk)
British Automotive at a glance
- 169,000+ direct jobs // 78,000 employed across UK supply chain
- 25,000 new jobs to be created to cover the production of connected and autonomous vehicles
- 2,000+ automotive suppliers in the UK – including 18 of world’s top 20
- £71.6bn annual turnover
- 80% of a vehicle can be manufactured in the UK
- Annually adds £12.4+bn to the UK economy
- Annually producing £34.3bn of exports – accounting for 12% of the UK’s total export goods
(Information courtesy of www.smmt.co.uk)
British Chemical & Pharmaceutical at a glance
- 105,000 (Chemical) and 53,000 (Pharmaceutical) direct jobs // 500,000 indirect jobs
- 30,000 employed in related R&D (7,000 – Chemical, and 23,000 – Pharmaceutical)
- Annually adds £15.2bn to the UK economy
- Adds £60m to the UK balance of trade every day
- UK’s largest manufacturing export sector (£24.7bn – Chemical and £20.7bn – Pharmaceutical)
- CIA members have a combined turnover of £50bn
(Information courtesy of www.cia.org.uk)
British Construction at a glance
- 1m direct jobs // annually provides upwards of 80,000 new job opportunities
- Employs just under 200,000 women in the sector
- Annually adds £92bn+ to the UK economy – represents 6,4% of the total economic output
- 35+% of construction employees run their own companies
- More than a quarter of employers have recruited a school leaver in the past 2-3 years
- Almost 50% of employers in the building services engineering industry take part in the modern apprenticeship scheme
(Information courtesy of www.cic.org.uk)
British Defence at a glance
- 142,000 direct employees // Almost the same number in indirect jobs
- Employs 4,300+ apprentices and trainees
- £24bn annual turnover
- 18% growth since 2010
- The UK is the world’s second biggest defence exporter behind the US, generating an average of £7,7bn for the UK every year
- 34% export growth between 2009 – 2013
- 9,000+ defence companies including SMEs exist in the UK
- BAE Systems – the UK’s largest defence company – currently employs 40,000 domestically
(Information courtesy of www.adsgroup.org.uk)
- 800,000+ direct jobs
- £78bn annual turnover
- 95%+ of the sectors 6,000 businesses are SMEs
- UK Electronics is the world’s fifth largest in terms of production
- 14 of the world’s top 20 semiconductor companies have established design and/or manufacturing sites in the UK
- In semiconductors, almost 80% of the activity comes from foreign direct investment
(Information courtesy of www.techuk.org)
British Energy at a glance
- 137,000 direct jobs // 500,000 indirect jobs
- Annually adds £5.5bn to the UK economy
- The energy sector reduced its carbon emissions by 13% in 2015
- Generation output from renewable sources increased by 30% from 2014 to 2015
- Invested £18bn in infrastructure, generation, distribution, metering and customer service during 2015
(Information courtesy of www.energy-uk.org.uk)
British Food & Drink at a glance
- 400,000 direct jobs – predicted to need almost 110,000 new recruits by 2022
- Annually adds £21.9bn to the UK economy
- Accounts for 16% of total UK manufacturing turnover – making it the largest sector
- Productivity has increased by 11% over the past five years
- 96% of the sector’s 6,360 businesses are micro to medium-sized
- Exports worth £12.8bn a year – 77% of which go to the EU
(Information courtesy of www.fdf.org.uk)
- 63,000+ direct jobs // 80,000+ indirect jobs
- Companies in the UK nuclear industry have the capability to provide 80+% of the work involved in new nuclear power station projects
- 16 reactors on nine sites currently supplies 19% of the UK’s electricity
- Over the next two decades, it is forecast that globally there will be £930bn investment in constructing new reactors and £250bn in decommissioning those coming off-line
- There are currently 15 operational reactors across the UK
(Information courtesy of www.niauk.org)
- 170,000+ direct jobs
- £23.5bn annual turnover
- 6,200 companies in the sector
- 35% of manufactured plastics products exported – valued at £6.7bn
- 1.7m tonnes of plastics materials produced annually – 3.3m tonnes of plastics materials recylced
(Information courtesy of www.bpf.co.uk)
British Security at a glance
- 76,0,00 direct jobs
- £9bn annual turnover
- 65% growth since 2010
- The UK is the world’s sixth largest exporter of security equipment
- Average exports worth £2.9bn to the UK
- Benefits include national infrastructure; cyber security; policing and counter-terrorism; border security, and major event security.
(Information courtesy of www.adsgroup.org.uk)
British Steel at a glance
- 30,000 direct jobs
- 54% of UK Steel workers work in Yorkshire and the Humber, or Wales
- Annually adds £9.5bn to the UK economy
- Exports worth £4.9bn in 2013
- 1m tonnes of output in 2014
- The value of the industry has declined by almost a quarter (24%) since 1990
- More waste steel is recovered in the UK and recycled than all other materials combined
- Each tonne of scrap recycled by the industry saves 1.9 tonnes of iron ore and 0.6 tonnes of coal
(Information courtesy of www.eef.org.uk/uksteel)
British Space at a glance
- 34,000+ direct jobs // 72,000+ indirect jobs
- £11bn annual turnover
- Growing at more than 8% a year
- Exports worth ££4bn to the UK
- Achieved 27% growth since 2010
- Largest application is broadcasting, followed by telecommunications
- Services support disaster relief; telemedicine; navigation, and broadcasting
(Information courtesy of www.adsgroup.org.uk)
British Textile at a glance
- 340,000+ direct jobs across 79,000+ companies
- Annually adds £11.5bn+ to the UK economy
- Gross value added (GVA) per head measured at an average of £34,220
- Third-largest fashion employer in the EU – behind Italy and Germany
- British consumers spend annually almost £55bn on the high street
(Information courtesy of www.fashionunited.co.uk)