One of the consequences of a weaker pound following the Brexit referendum has been a growth in UK manufacturing. In 2017, the country’s manufacturers were enjoying the strongest demand for their products in nearly 30 years.
A Manufacturing Technologies Association (MTA) report, launched at MACH 2018, confirms this, highlighting what it calls the true impact of manufacturing on the UK economy.
The challenge for manufacturers is to keep up the momentum and properly position themselves where they can fully exploit these favourable conditions.
As David Atkinson, the UK Head of Manufacturing at Lloyds Banking Group explains, “A weaker pound has meant new international opportunities for manufacturing growth. However, this also means manufacturers must fill critical gaps in both capacity and productivity.”
The MTA’s report states that manufactured goods make up 48% of UK exports. This is against a background of global growth, which also favours manufacturers expanding overseas.
“Currently, this is a sweet spot for UK manufacturers, with a buoyant world economy and Eurozone. The conditions are near-perfect for exporters.”
“In recent years, British goods have tended to be inelastic when it comes to price,” suggests David, “because they typically comprise higher value products and services; and cost pressures for manufacturers remain high.”
“Therefore, they must look at how they can improve productivity through greater efficiency, to maintain their margins”, David continues.
“The biggest challenge for manufacturers is keeping pace with demand”
One solution is for manufacturers to invest in innovative solutions, and to fully integrate digital technology into their operations, plugging into what is becoming the fourth industrial revolution.
What Do Manufacturers Need for Export?
Many UK factories have been investing more in growth than at any point since 2014, according to the Bank of England.
There has been sustained business confidence concentrated in various parts of the country, with recorded investment intentions high. However, with the uncertainty over Brexit hovering in the background, it is vital that manufacturers can continue to attract increased investment.
David Atkinson is keen to make it both easy and attractive for would-be investors.
“Lloyds Banking Group has made a £1.5 billion fund available for investors and we have got specialist relationship managers on hand, with an impressive depth of knowledge when it comes to the manufacturing sector”
“Last year, manufacturing outperformed the rest of the UK economy’s growth. The future is looking very positive,” concludes David.