CAN POWER GROWTH MANUFACTURING

So are there glimmers of hope? Yes, says Make UK. Covid-19 has already forced many manufacturers to turn to suppliers closer to home and diversify their supply chain too.

Does the UK still make things? Most emphatically – yes it does.

With an annual output of £183 billion, according to the manufacturer’s organisation Make UK, the country remains the ninth largest manufacturing nation in the world.

While the impact of the Covid-19 pandemic hit the sector hard, Make UK forecasts that manufacturing is on track to return to prepandemic levels by the end of 2022.

It’s also a major job creator, with around 2.5 million jobs offering, on average, 12 per cent higher wages than the whole economy. And 95 per cent of those jobs are outside London.

If you want more figures, the sector pumps £31 billion into the UK economy each year, and exports more than half of what it makes overseas, with top export countries being the United States, Germany, the Republic of Ireland and Netherlands.

Who’s doing all the work? More than 130,000 manufacturing SMEs across the country often supporting and working alongside the manufacturing behemoths of Shell, BP, Ineos, Unilever, Jaguar Land Rover, Airbus and BAE Systems, to name just a few.

But with a global recession looming (if not already here), the next couple of years are going to be as tough as any most of us can remember. Rising prices, supply chain challenges, lack of skilled staff, the administrative car-crash of Brexit – and navigating the road to net zero would all be manageable if they came along one at a time, but piled on top of each other? Even the strongest manufacturer is already facing tough decisions.

A survey released by the organisation in May found that manufacturers who had long adopted offshoring in response to globalisation, thanks to almost guaranteed transport links and low-cost production, adapted to source more goods in the UK or Western Europe. They have also increased their number of suppliers to give themselves more options in the event of disruption.

The report shows these trends accelerating in the next two years, a trend to which the invasion of Ukraine and resurgence of Covid disruption in China is giving further impetus.

Verity Davidge, Director of Policy at Make

UK, said: “For decades manufacturers have used increased globalisation and supply chains to drive efficiency and create lean manufacturing processes which have helped them grow and remain competitive. The economic shocks of the last few years have created a perfect storm which has turned these models upside down and forced companies to re-evaluate their business strategies and seek suppliers much closer to home.

“As a result, we may now be seeing the era of globalisation passing its peak, with disruption and volatility for global trade fast becoming normal. For many companies this will mean leaving ‘just in time’ behind and embracing ‘just in case’.”

Johnathan Dudley Managing Partner of the Midlands for accountants Crowe, says that more financial support, incentives and grant schemes are needed to help the thousands of UK SMEs manufacturing businesses.