REGIONAL REPORT
Sheet metal bending operations at KMF Group in the UK .
the UK ’ s economic performance ,” he added .
“ Manufacturers have continued to show their ability to overcome wave after wave of challenges , but they cannot continue to do this indefinitely without some more long-term support from the Government . We have reached a tipping point where the ramifications of regional disparities may permanently affect the manufacturing sector , which could hamper future growth ,” added Richard Austin , Head of Manufacturing , BDO . “ Now , more than ever , there is a strong case for policies and measures that will help UK manufacturers to invest and expand . Despite the challenges , demand for labour and investment intentions remains strong and the next few months will be critical to the sector ,” he concluded .
The productivity challenge
Between 2000 and 2007 , the UK economy enjoyed a healthy period of productivity increases fuelled by high levels of investment in innovation , capital accumulation and a skilled workforce , creating a virtuous cycle of growth and prosperity . However , disaster struck in the form of the global financial crisis . The productivity slowdown that resulted was worldwide in its impact but in Britain , it was particularly acute .
“ Some of the factors behind the slowdown were global – affecting all countries equally - but much of the slowdown in the UK is due to a failure to invest in capital and , to a lesser extent , in skills . Between 2009 and today , the UK ’ s productivity growth rate has been the second slowest in the G7 , ” commented Make UK .
“ Several significant shocks have hit the British economy in recent years , sparking a shift in its macroeconomic model . The financial crisis curbed the flow of credit forcing companies to cut back on recruitment , research and development , forcing firms to innovate for a lot less . Then there was Brexit . The uncertainty caused by Britain ’ s exit from the EU depressed business investment by as much as 11 % by the time of departure in 2020 , relative to what it would have otherwise been if the pre-existing trend had continued , and erected trade barriers with our biggest trading partner necessitating firms to explore new sources of inputs and markets for outputs . COVID-19 exposed further cracks in the system ,” continued Make UK in a recent report .
Since the coronavirus pandemic , 470,000 more people in the UK are out of the workforce on ill-health grounds , while many more continue to work at a reduced rate due to long-term health problems . Early retirement also increased during the lockdowns — a trend that was particularly acute in the manufacturing sector — and an ageing population is a further headwind against higher participation rates .
“ Stricter Home Office rules since Brexit have made it harder and
Aluminium fabrication services ( image : JC Metalworks in the UK .)
significantly more expensive for firms to recruit from overseas . If manufacturers want growth or a boost to their profitability , they therefore have to find ways to do more with less ,” outlined Make UK .
Make UK has also highlighted potential solutions to the productivity challenge , such as investing in education and training , improving recruitment and retention and finding ways to widen participation . Technology is already providing solutions , as robots and cobots aid workers on factory floors while assistive technologies and generative software are also helping employees to increase their output and their firms ’ innovation . This productivity puzzle can be addressed , says Make UK , through three pillars : investment , innovation and institutions ( an industrial strategy ).
The energy factor
As rising inflation has bitten , UK manufacturers have also been hit by soaring gas and electricity prices hitting record highs , leaving businesses desperate to cut their energy use . Research released last year by Make UK and Inspired PLC delved into how energy-efficient practices and technologies can help companies to save money and boost productivity while at the same time moving towards their Net Zero targets ,
“ Over the past two years , the cost of energy has been highly turbulent , exacerbated by an increase in operational costs . This has left manufacturers forced to operate with a significantly reduced margin , making the introduction of energy efficiency projects an attractive proposition ,” commented Make UK .
In the report , it highlighted approaches that UK businesses have taken to reduce energy consumption from low-cost , low effort measures to more costly investments which deliver equipment and process upgrades . Simple steps such as getting the right energy supplier and securing an advantageous contract is critical . Monitoring energy use through smart metres and sub-metering can further cut consumption , providing more granular detail of unnecessary use .
“ Britain ’ s manufacturers have made significant steps to cut carbon emissions and move towards Net Zero . But , to supercharge that journey , business needs Government to play its part in driving the process forward ,” commented Make UK last November , calling for a National Advisory Energy Service to help SMEs digitalise their production processes . This , it said , should provide smaller funding to companies of up to £ 20,000 , including an energy audit , sub metering and an implementation plan as well as helping businesses to access the right funding .
Custom stainless steel fabrication ( image : JC Metalworks in the UK .)
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