Despite some anecdotal evidence to the contrary, the UK’s manufacturing sector is proving resilient, according to data from the Office for National Statistics (ONS). It showed that manufacturing output grew by 1.4% month on month in May, against a forecast of 0.1% and -0.6% logged in April.
On an annual basis, UK manufacturing production figures increased 2.3% in May, beating expectations of 0.3%. The manufacturing industry bounced out of the pandemic and showed tenacity to fulfil healthy order books despite global supply chain challenges and Brexit.
Data from MAKE UK showed that due to COVID-19, 50% of manufacturers made redundancies. Hiring people back into businesses has proven a challenge, in a trend common to most sectors. It’s a challenge that requires investment by individual companies and the wider industry.
However, doing more with less is never a bad thing in terms of efficiency. It is accelerating digital transformation plans with new systems and greater use of data, all of which require fresh investment.
Innovation will drive growth even in the toughest market. It can take many forms, from the product range to manufacturing processes and new business models. Management teams need the financial headroom to drive change and profitability.
Supply chains have become more complex due to the introduction of customs inspections and regulatory requirements. As a result, it takes more time to move goods around, and the cost has increased due to pressures on logistics.
Equally, currency fluctuations make planning more complex, and while a drop in the price of sterling makes exports more competitive, it has driven up the cost of imported goods. So it’s vital to have a strategy in place to manage volatile currencies as the pound, sterling and dollar rise and fall.
Despite the positive ONS figures for May, many pundits forecast a recession in the second half of 2022. It won’t be many entrepreneurs first, and it certainly won’t be the last. However, some steps can be taken to mitigate the impact and ensure that the business is in a position to take advantage of any commercial opportunities that arise.
It is essential to have a funding partner in place that understands all elements of the business and wider market. Having funding on hand when needed can allow quick investment to fill a market gap if a competitor withdraws or undertake M&A activity.
Every market has opportunities for the entrepreneur that has prepared and is well placed to be flexible and react quickly.
According to industry data, British manufacturers are facing the largest shortage of skilled workers since 1989. Retaining skilled people will be a challenge if the market takes a downturn, but it will give businesses the capacity to react to market opportunities and emerge quickly from any slowdown. Investing in apprenticeship schemes and wider training will help to retain talent in the business.
The UK’s manufacturers are moving toward industry 4.0, where automation, AI and data streamline production and allow businesses to become more innovative. These efficiencies are already being realised and should be a focus over the coming years, even when the sector is facing headwinds.
Investing in robotics will free employees to undertake more skilled roles and become more productive. Research by McKinsey suggests that by 2030, the time spent using advanced technological skills will increase by 41% in Europe. The first step comes with investing in the technology and training staff. Richard Branson said: “Business opportunities are like buses, there is always another coming.” It’s a quote that should be on every office wall over the coming months, where flexibility and an entrepreneurial outlook will drive success.