Stephen Phipson, Make UK’s CEO, shares some of the findings from the association’s recently published Senior Executive Survey, which suggest that while the future does hold some risks, there are opportunities for the manufacturing sector.
This year begins in the wake of a year which has shaken the global economy to its core. Domestically, by now the UK will have fully completed its exit from the European Union and, at the time of writing the prospects for a trade deal remain on a knife-edge. The Chancellor’s Spending Review back in November was delivered against a truly unprecedented backdrop with the worst fall in economic output since the statistics were first collected 300 years ago. In view of this, industry would have had little expectation in the face of a realistic statement which laid bare the immense challenges the Chancellor and the economy faces in the near term. In the face of these, it is absolutely right that the priority must be to protect jobs, whilst trying to create opportunities for young people whose futures have been left badly scarred. Equally, it is vital to put in place the foundations now for how we rebuild our economy.
In the light of this, the Chancellor did his best to address this difficult balancing act with a package of measures designed to get boots and shovels on the ground, especially the National Infrastructure Bank and Levelling up Fund to boost growth in those Regions which have been hardest hit.
The statement also contained some other positive measures for manufacturers in the extension of the incentive to recruit Apprentices and the continuation of the Kickstart scheme. There was also a boost to R&D funding which will be important if the UK loses EU funding, and which we hope will be allocated to rolling out the Made Smarter campaign nationwide.
Now is a time to look forward, however. At Make UK, we have recently published our annual Senior Executive Survey with our partners PWC. This flagship report looks at the risks and opportunities for the year ahead, how manufacturers are addressing these challenges and how they are looking to take advantage of growth opportunities. As you might expect, this year’s report is a curate’s egg in that it offers many grounds for optimism but also grounds for concern.
To start with the positives. Manufacturers are investing significantly in new product development which they regard as their number one priority while confident of improving productivity, developing digital skills and improving their environmental performance; which was regarded as ‘the right thing to do’, ranking in second place. They are also looking to grow their exports to the Asia Pacific and the United States in particular, while the opportunities to re-shore production and source a greater proportion from UK suppliers ranked highly in terms of priorities.
As you might expect, the downsides are largely associated with the UK’s departure from the EU. Customs delays and the increased cost of regulation ranked first and second in terms of business risks, while there was a striking concern about the UK’s ability to attract international talent. Companies also said they expected exports to the EU to fall while overall, they felt the UK would become less attractive as a destination for manufacturing.
Despite these concerns, manufacturers were confident about their own individual performance, though less so about the UK economy’s performance overall.
The emergence of vaccines could, of course, also be a game-changer given how fast a scenario we are working in at the moment. Let’s hope that in twelve months, we are looking back on a period where manufacturers have led the UK economy back to growth across all sectors and regions.
