Manufacturing is Coming Home: What’s Next?
There’s no argument that the pandemic has caused massive disruptions, but there’s still debate as to what the future will hold.
Some in the sector are optimistic for a strong rebound, others are considering this time as a way to transform and diversify and of course, there are still those that are more pessimistic about the future and think that a return to pre-covid production levels is still a long way away.
One core change that has strengthened the sector over the past year and for the future ahead is the ability to quickly adapt.
“The trend we are seeing across the sector is a move towards agility and resilience. An agile manufacturing sector is one that is able to swiftly respond to shocks that interrupt the natural order of a commercial system. These can be global shocks, such as the pandemic or the financial crisis over a decade ago, or smaller, more specific shocks such as localised natural disasters.
And manufacturers are more aware of these challenges today than they were one year ago and as such have opened the door to investing in people, innovating new products, expanding into new markets all the while prioritising resilience in the industry to build agility. The latter has risen up the to-do list of many business owners over the last year. Businesses that successfully develop a strategy that advances these four key areas will find themselves more agile in the face of future shocks.
The pandemic has in fact provided an opportunity to reconsider our approach to building resilience, working cross-sector. If building agility can improve one aspect of a business’s functions in one particular sector, it can be done elsewhere. More specifically, it can improve productivity by embracing greater digitalisation, building a strong industrial base and transitioning to a sustainable economy. “
– Bhavina Bharkhada, Make UK
In a report published by BDO39 in November 2020, it found that despite short-term actions to reduce costs, 27% of SME manufacturing businesses fear they will run out of cash by the end of 2021.
Visibility of Manufacturing Business
Many businesses consider the Covid vaccine rollout to be critical to their rebound, with hopes to a return to a version of normality. In another BDO report, 95% of manufacturers predicted that their business would fully recover within a year of the vaccine becoming available, with the remaining 5% expecting this in the next 1-3 years.
It’s not just the pandemic manufacturers need to consider in their recovery phase, there is the elephant in the room of Brexit, which has sort of become a secondary thought in comparison to the last year. As of January 2021, the UK finally left the single market and it was replaced with the EU-UK trade and cooperation agreement (TCA) which is far less substantial. As immediate impacts, the UK GDP growth fell by 2.9% and 20.3% of exporters were facing border disruptions and delays at customs.
As the UK manufacturing sector is so heavily reliant on exports, these border disruptions could have ripple effects across the industry. Some of those most greatly affected include textiles, chemical and electrical manufacturing, which according to KPMG’s predictions could see output at the end of 2021 between 6-12% lower than in Q4 2019 due to bottlenecks in the supply chain, border friction and falling investment.
This viability particularly affected those in basic metals and mechanical equipment industries. However, many did take action to protect their business in the short-term and 80% are reassessing their strategies for long term sustainability.
Tom Martin of Jetsoft, provides his predictions for the future of the aerospace sector.
“I think the aerospace sector has real potential for rebound. Initially we thought that due to less people flying, there is less planes in the sky and we thought that airlines would hang onto their plane assets for longer and therefore fewer plane purchases. But actually, we have found that instead of trying to consistently maintain them until flights pick back up, they are actually decommissioning these planes. So, when there is a pick up of international flights, they are going to need to buy new planes. We have also started to sell into test houses that test components for manufacturers. These are testing parts for the likes of Space X, Blue Origin and Virgin and we have seen significant investment going into drone taxis or vertical take-off taxis, so there is more manufacturing for these new generation of aircrafts.”
This drop in exports replicates those many manufacturers who are heavily reliant on EU customers and how they may have to readjust their distribution strategies to look further afield, to the likes of the MENA or APAC. Targeting those more emerging markets offers great opportunities for those that deliver specialist goods that cannot be replicated in the region, such as advanced robotics or cutting-edge medical devices.
Whilst a proportion of businesses have been experiencing delays at borders, this goes both ways, so those importing into the UK are also facing similar disruptions. These delays and additional red tape could make imports look less appealing and as discussed earlier on could prompt consumers to look more local.
Conclusion
We can only predict and debate the future outlook of the manufacturing sector, but one thing’s for sure, the UK manufacturing sector will always put up a fight!
As the last year has proven, the manufacturing sector is resilient and those who embrace change can expect a strong future in the coming years. Innovation and sustainability are going to be pinnacle to UK manufacturing growth, delivering a unique, competitive advantage.
As the old saying goes, hope for the best and prepare for the worst. Manufacturers need to take this time to revaluate the last year and how their business have been impacted, alongside their target market. Understanding where threats and opportunities lie and mitigate where possible. Actions highlighted in the report that could strengthen a manufacturers position in market include;
- Integrating technology for productivity and efficiency gains driving towards carbon-neutral
- Building a digitally trained workforce
- Diversify their offering, target market or region
- Having an agile operating model
The manufacturing sector should aim higher than a recovery, it should aim for a rebirth.
Interested in finding out more? Let’s chat.
We’d love to set up a call to discuss how we can help your business achieve its goals and stay at the forefront of your industry. Jessica, our Senior PR and Content Manager, is excited to speak further with you.
Jessica has several years experience in PR and Content, during which time she has created countless numbers of heavy research pieces, competitor analysis’, persona documentation and market research. She’s passionate about all things heavy industry and the future of marketing within, and even better, she loves helping businesses realise their potential.
Reach her on 0113 350 2038 or at jessica@halston.marketing
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