SPECIAL REPORT
Although concerns over UK productivity levels have been touted by certain UK politicians , it is improved investment in skills , infrastructure and education that helps to boost productivity levels . Labour shortages do not help productivity levels , as managers spend time trying to find staff rather than boosting the efficiency of their businesses , and these shortages can result in higher costs .
Energy supply is another issue . The UK extracted itself from the EU ’ s interconnected energy policy through Brexit ; an energy agreement was not included in the free trade deal struck between the UK and the EU . Energy isolationism increases the risk of energy shortages and price spikes .
Future forecasting
“ Just as has been the case throughout the year so far , the Fabricated Metals subsector has a more positive outlook . The output forecast has been marginally revised upwards , to 9.0 % growth expected in 2021 . Performance of the fabricated metals subsector is tightly linked to wider manufacturing activity in the UK , hence why its subsector forecast is near to that of the overall manufacturing industry forecast . Employment is forecast to decline somewhat , away from the UK manufacturing average , at -2.7 %,” commented the Make UK / BDO Manufacturing Outlook Q3 report .
Shortages in the semiconductor supply chain are expected to persevere well into 2022 , with industry analysts suggesting that the backlog of work is now so severe , that even if supply issues resolved overnight , it would be mid- 2022 before the backlog of orders would be cleared . As a result of these sustained supply issues , the output forecast in the report has been revised significantly downwards for the electronics subsector , to 4.7 % for 2021 .
These shortages have also severely hampered UK car manufacturers ’ ability to return to pre-pandemic finished vehicle production levels . As a result , the 2021 output forecast for the motor vehicles subsector has been revised downward heavily , now at 11.3 %, tumbling from 23.6 % last quarter .
“ This means that it is now extremely unlikely that the UK motor vehicles subsector will be able to make up the majority of lost output in 2020 this year . Employment is expected to decline moderately in the subsector in 2021 , by -1.7 %,” cautioned the Manufacturing Outlook .
“ The Mechanical Equipment subsector was one of the worst-hit industries in terms of
Shortages in the semiconductor supply chain are expected to persevere well into 2022 output loss in 2020 . With a decline of -20.1 % of output in that year , it was the third-worst performing subsector in 2020 after Other Transport and Motor Vehicles . Forecasted growth for the mechanical equipment subsector had been strong last quarter , and now that has been further revised upwards , with 20.5 % growth in output expected in 2021 . This significant growth forecast makes the mechanical equipment subsector the industry with the highest growth forecast for the year . The subsector is typically a recipient of domestic investment expenditure , such as when businesses want to upgrade their machinery and plant equipment ,” the report added .
Relationship with EU
It is essential that UK manufacturers maintain a close relationship with their European trading partners , now and in the future .
“ The MTA is a long-time advocate of maintaining close ties with European manufacturers – both before Brexit and afterwards . As the UK ’ s representative with CECIMO , the European Association of the Machine Tool Industries and related Manufacturing Technologies , the longstanding relationship between UK and EU manufacturers , some the result of decades of successful collaboration , needs to continue ,” commented the UK ’ s Manufacturing Technologies Association ( MTA ).
In a letter early this year to the heads of CECIMO , MTA ’ s CEO James Selka DL confirmed that the MTA , and more importantly its members , wanted to continue trading with partners in the EU and strengthen the mutually valuable long-standing relationships that had been forged over generations . Before the EU referendum in 2016 , the MTA consulted its members on their preferred outcome . Of those responding to the survey , 89 per cent said the best interests of their company lay in remaining part of the EU .
“ That the majority of the MTA ’ s membership should strongly favour the UK remaining within the European Union is perhaps not surprising ,” said Mr Selka . “ The sector is remarkably internationalised with over 80 per cent of the output of the UK manufacturing technology sector exported , with countries of the EU by far the largest single market ( around 45 %).”
He added that many MTA companies were multinationals , including companies from outside the EU - in particular , the United States and Japan – many of which have established a European headquarters in the UK . This has created a multiplier effect , stepping up economic activity and driving employment growth in a diverse range of business functions such as Design , Development , Research , Applications Engineering , Service , Marketing , Management and Finance – and not just a UK sales team .
“ Whilst the ( Brexit ) agreement set out by the EU and UK Government means that we will need to adjust to a new way of working , and that this is likely to take time to settle down and become normalised , we remain totally committed to continuing business with our closest neighbours in Europe ,” said Mr Selka earlier this year .
The MTA sent its letter to its counterparts in Europe to assure them that the UK remains very much open for business . The reaction has been swift , with strong support from CECIMO to the MTA ’ s pledge .
MTA ’ s MACH manufacturing technologies exhibition will be held in Birmingham from 4-8 April 2022 . The Super Deduction 2022 tax initiative is expected to be in place then for UK companies wishing to invest in the latest machine technologies . n
46 | sheetmetalplus . com | ISMR October 2021