Industry optimism forecasts growth in manufacturing
It's no secret the UK manufacturing sector is buoyant for the first time since the COVID-19 pandemic. Members of the Made in Group have reported optimism for growth on many occasions since the beginning of the year, specifically in the BIG Manufacturing Growth Report 2024. The report revealed that 3 in 4 manufacturers expect double-digit growth over the coming 12 months. This comes after investment in people and technology - specifically automation, which is set to increase production and efficiency. As the UK continues to face economic challenges - Brexit-related regulations, rise in energy costs, and recruitment hurdles, could this be the best year yet for growth in manufacturing?
It may be hard to believe that the COVID-19 pandemic started over four years ago. In many cases, it almost seems like a distant memory - no more masks, traveling freely is back and social distancing is a thing of the past. However, during 2020, and most of 2021, the pandemic caused major upheavals for manufacturing. It brought about frailty in supply chains and production networks due to lockdown pressures and enforced safety protocols - which in many cases seemed almost impossible for manufacturers.
BREXIT Regulations.
For the UK manufacturing industry, the pandemic impact coincided with Brexit regulations, impacting trade with Europe. As expected, Brexit has affected the cost of doing business. This is reflected in the cost of trading between the UK and Europe. In a report released by parliament ‘Statistics on UK-EU trade’, between 1999-2007, the EU accounted for 50-55% of UK exports. By 2022, the figure had fallen to 42% - meaning the UK is exporting less to the EU now more than ever.
Simon Rehill, Managing Director of Pulsar Instruments - a noise measurement expert based in Yorkshire, said: “Europe’s harder to do business with ever since Brexit”. To tackle this challenge, manufacturers like Pulsar are diversifying how and where they do business. Simon continued: “Whilst there is some struggle around Brexit-related regulations, we have changed our focus to expanding globally - specifically to the Middle East.” Pulsar has moved their marketing and trade show exhibition efforts to tackle the decrease in European sales.
Many may agree with the popular misconception that the Middle East does not adhere to a high level of health and safety rules. Simon continued: “Qatar and Saudi Arabia have the same regulations as the UK, making it very accessible for British manufacturers”. As a result, Pulsar has reported a 20% increase year on year in exporting with a further prediction of growth in 2024.
Rising Energy Costs.
When it comes to rising energy prices in the UK, compared to the costs faced by competitor firms abroad, it places British manufacturers at a significant disadvantage. Between 2021 and 2022, Uswitch reported the business energy market increasing almost three quarters by (74%). Another obstacle for UK manufacturers to overcome, this means a significant rise in the cost for customers on products. Ian Ross, Managing director of County Fabrications, expressed his concern: “We spend £7,000 a month on electricity and we are currently struggling to cut costs at our current facility.” Bright Steels - a manufacturer of steel bars believes that energy costs are making them less competitive. Managing Director Philip Jackson said: "The price of gas and electricity in the UK is higher than our European competitors pay".
Many businesses are taking an active approach to counteract the rise in energy costs and minimize the rising rates of their products. Alloy Wire - Manufacturers and experts of wire components are set to install solar panels at their facility in Dudley. Tom Mander Managing Director said: “With the installation, we are aiming to reduce our energy usage by approximately 23%”. Manufacturers who are focused on their energy consumption are both tackling rising costs and their impact on the environment - benefiting businesses and customers.
Recruitment Challenges.
Recruitment seems to be an ongoing struggle for manufacturers, specifically finding skilled laborers and retaining talent within the business. In the Made in Group's People and Skills survey published in 2023, 3 in 5 manufacturers suggest recruitment is harder now compared to pre-pandemic. When it comes to retention and recruitment specifically, 38% of manufacturers say retention is more difficult post-pandemic whilst 59% say recruitment is significantly harder.
Against the odds, manufacturers are successfully navigating recruitment and retention issues by leveraging technology, investing in employee development, and fostering a positive culture at work. Recol - a leading sheet metal fabricator, focuses on investing in the latest technologies to attract a young, tech-savvy, skilled workforce. David Littlewood, Sales and Marketing Director at Recol said: “Training for these technologies is streamlined and more accessible to the younger workforce, who are generally more adept with digital tools. This shift towards automation not only aids in operational efficiency but also makes Recol a more attractive workplace.”
Regardless of ongoing economic events that are affecting the industry through export and import regulations, high energy prices, and lack of skills in the labor market, there has been a surge of positivity in manufacturing in 2024. This has been a result of more businesses focusing on improving production and efficiency (85%) over the last 6 months. Looking ahead, manufacturing is set for major growth as we delve further into 2024.
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