Despite scaling back in recent years, manufacturing is on the up with increased demand, both domestically and internationally, fuelling the industry’s growth.
Once the world leader in manufacturing, the UK has faced strong competition from emerging markets in recent years. But the Confederation of British Industry’s Autumn 2013 report pointed to a brighter future. The study found that manufacturing enjoyed its strongest rebound for two years, driven by greater demand, rising orders and robust growth. Further expansion fuelled by small companies with new products, working methods and modern facilities is expected in 2014 and beyond.
Sector at a glance
- 10% – The manufacturing industry still accounts for a large part of the UK economy
- Factories are hiring at the fastest rate since 2011, with the employment sub-index rising to 54.0 from 51.9 in September 2013
- £340 billion – The total amount of sales that the UK manufacturing industry makes
Manufacturing and the economy
There has been much talk about the manufacturing industry struggling to compete with competitors in other regions. But the above chart is proof that demand for British manufacturing remains high. Between 2009 and 2010, revenues jumped 20 per cent, before rising by a further 28.9 per cent the following year. While the 14.5 per cent growth in 2012 was more modest, the industry is still in good shape.
The sector’s strong performance is borne out by the Markit/CIPS Purchasing Managers’ Index, which saw manufacturing reach 56.7 in autumn 2013. Growth in output and new orders remained close to the 19-year high reported in August 2013.
When interviewed about the industry’s performance, Rob Dobson, Senior Economist at Markit, told the BBC: “UK manufacturing continues to boom. These numbers are encouraging in respect to the rebalancing of the economy, with goods production likely to provide a major stimulus to economic growth in the third quarter.”
Fresh blood needed to engineer growth
Commentary by Stephen Tetlow, CEO of the Institution of Mechanical Engineers
Small and medium-sized enterprises (SMEs) are the backbone of UK manufacturing, providing 57 per cent of the country’s output. UK SMEs have created some of the world’s most iconic and innovative products, from bag-less vacuum cleaners to foldable bikes and revolutionary computer software. They are the engine of growth and underpin the future of the nation’s wealth.
But while there are many SME success stories in the UK, there are still many companies facing huge challenges. The biggest at the moment is having the right people with the right skills at the right time. Getting skills logistics right is much harder for SMEs than for larger companies with the HR structure in place to organise apprenticeships and graduate training schemes.
“By 2020, the UK needs to be producing double the number of engineers, scientists and technologists than it does now”
To ensure SMEs can source the right amount and level of talent, much more needs to be done to bridge the engineering skills gap. By 2020, the UK needs to be producing double the number of engineers, scientists and technologists than it does now. Much needs to be done to support smaller companies that want to offer apprenticeships to enable future growth.
And we need more young people pursuing engineering careers. We urgently need stronger co-ordinated links between schools and industry, offering work-based learning and providing better careers advice in schools and colleges. In order to get long-term investor return, investment must be made into the most critical company asset: people.
2,700 - The number of SMEs that benefit from the Government Regional Growth Fund
The Government’s Regional Growth Fund is helping many SMEs around the country launch new R&D programmes, with more than 2,700 SMEs benefiting from the scheme so far. It is imperative that this funding continues, and that the path is eased for SMEs to exploit these opportunities and negotiate the bureaucracy involved.
But unless the country doubles its output of engineers and technicians by 2020, any aspirations for long-term growth will be dead in the water. Doubling the output of professional engineering technicians and graduates is not just a cry for help; it’s a call to arms.