How the UK can regain its position as a global manufacturing powerhouse
Whilst recent figures showed that the UK’s manufacturing sector grew by 0.9 percent in September, the sector shrank unexpectedly by 0.4 percent in October 2015. Despite this decline, the chemical manufacturing sector is among one of the fastest growing industries with a 31 percent sales growth in Q1 2015 alone. So what is setting this apart?
It is no coincidence that in line with this growth, the government has pledged to help the chemical manufacturing sector do more business internationally, including helping companies partner internationally in technology innovation. With this in mind, the link between investment and growth cannot be ignored. If investment in technological innovation alongside additional factors was replicated across different industries, we might see similar levels of productivity and growth throughout the manufacturing sector as a whole.
In reality however, a recent CBI survey found that despite manufacturers indicating that their plans for spending on buildings and machinery remains broadly unchanged for the year ahead, their plans for spending on innovation and training had eased. While the struggle across the industry is clear, it is disappointing that firms are scaling back on vital elements that could have an uplifting impact on manufacturing growth and productivity.
It is likely that this ease is a result of the pessimism within the industry. The survey also signalled that manufacturers’ confidence about their business situation and export prospects for the year ahead fell at the fastest pace since October 2012. In addition, economists estimate that one of the key triggers affecting the manufacturing industry – the strength of sterling – will continue to depress export orders until mid-2016 at least.
It is clear that the UK’s performance in exports needs to be boosted, visible through the launch of its ‘Exporting is GREAT’ campaign, which aims to get 100,000 British companies exporting by 2020. But for this to happen, the government needs to act decisively to protect spending in these areas. In fact, it needs to curb spending on ad campaigns, and pledge investment in innovation and skills to increase exportation, enhance manufacturing growth and improve productivity.
With support from the government, the hope is that positivity within the industry itself will pick up and that manufacturers themselves will become reinvigorated to invest in their industry, specifically in innovation, training and product and process tools to support decision making and action taking. Modern enterprise resource planning (ERP) platforms, for example, give organisations the ability to analyse business conditions and develop improved business plans, monitor and measure progress and provide the visibility into day-to-day operations.
Responsiveness and faster decision making could be key. This can include insight of capacity requirements planning, work order management, job costing, product data management and production planning and scheduling, which can all assist in helping manufacturers to ensure processes are streamlined and cost effective. Planning and budgeting on an annual basis, especially considering the current state of the economy, is no longer possible.
The message is simple. The UK has some real strengths and manufacturers need to play to them. With a wealth of technical skills and knowledge and a strong history of innovation, it is here the solution lies. By harnessing UK employees’ technical abilities, and evolving strong research and development capabilities, UK manufacturers can use innovation to achieve a unique competitive position.
The manufacturing industry is key for the UK economy. It is a vital sector and organisations need to be resilient and ensure they are doing all they can to invest and innovate. Technological innovation needs to be grasped with both hands, whether improving internal production processes, increasing automation or implementing modern software such as ERP solutions. This innovation can help firms achieve growth and subsequently position the UK as a global manufacturing powerhouse.
Stuart Hall is Sales Director for Epicor Software