Despite widespread belief, UK manufacturing is robust. Britain is the 8th largest industrial manufacturer in the world, with Aerospace, Defence, Electronics and Pharmaceuticals performing strongly. The sector accounts for 44% of UK exports, 11% of GVA and employs 2.6m people.
So where does the perception of a weakened sector come from? Manufacturing employment has declined in line with increased production from the Far East. But the UK is not alone in that. The idea that all manufacturing is “from China” is wrong. For highly skilled technology sectors, there is opportunity in the UK.
However, with skills shortages and Brexit [still] looming, there are undoubtedly challenges ahead.
An uncertain economy
A resolution to the Brexit crisis can’t come quickly enough for the sector. The Annual Manufacturing Report 2019 found that;
>> 71% of UK manufacturers say Brexit is damaging strategic-planning and business prospects
>> 64% say Brexit will cause chaos for the manufacturing sector
No surprises there, but overall belief in government policy is weak. Strategic planning is at risk, and lack of clarity is resulting in lack of confidence. However, the report also found a steely resistance, with 77% of manufacturers feeling that the UK has “the drive to succeed”.
Yet the main issue remains: no one knows what will happen. But preparation for the worst-case scenario – a no-deal and WTO tariffs – is possible. With almost half of Britain’s manufactured exports going to the EU, frictionless trade is crucial.
“Failure to ensure frictionless trade with our biggest market could have disastrous implications for major companies and their supply chains.”Stephen Phipson CBE, Chief Executive EEF
Bridging the skills gap
There is deep concern across the industry around the lack of suitable skills supply and training. Manufacturing businesses are hungry for skilled engineers, but faces huge challenges in finding them. Recent research states;
>> 57% say the education system is a disaster for the industry
>> 66% say people do not understand the importance of manufacturing to the UK economy
The problem lies partly with the fast pace of technology; where attracting, recruiting, retaining and training people in line with technological advances is a constant struggle. Meanwhile, others pinpoint a nationwide crisis in skills training, from apprenticeships through to adult training. The quality and quantity of skilled candidates is decreasing.
This has far reaching consequences for the sector and its future. As older, skilled manufacturing employees retire there are an insufficient number of properly trained young people to take their place. Some companies now have their own training schemes to help fulfil future roles.
Aside from EU workers and the question of future visas; on the whole manufacturing needs to be promoted to be a more attractive option. Some businesses, especially SMEs who don’t have global resourcing, are focusing on recruitment infrastructure. Forging links with schools, colleges and universities now helps them to attract future talent.
In addition, others are looking at operational design – leading to the necessary growth of automation and robotics to help close the gap.
Linking strategy & spending
Another challenge faced by the sector is the relationship between spending and strategy, which is often at odds.
PwC’s Strategy& conducted research to understand how well industrial companies live their strategy. Nearly three quarters said that their capabilities were not materially different from competitors, while a similar number (74%) said that strategy isn’t translated into specific actions. So there is a clear lack of differentiation in the marketplace, but companies remain unclear on exactly how they can improve the situation.
>> 84% said that strategy is not well understood across the business
>> 56% said that they only cut costs when markets require it
Using a more strategic approach could pay dividends. While many organisations allocate time and resources in a reactive way, those who employ a strategic approach can prosper. Clearly communicating linked activities to strategic objectives ensure that all stakeholders know what is required to win.
How we can help
The rise of digital technologies, the Information of Things (IoT) and Augmented Reality (AR) is bringing fundamental changes to the sector. Customers are increasingly seeking innovation, efficiency and production transparency.
Against a backdrop of economic uncertainty and technological changes, smarter working is in demand. Working strategically in a ‘business partner’ relationship can deliver savings across your business; including improved processes and efficient supply chains.
Find out more: to discuss your manufacturing business needs, contact us today.