Harnessing agility and resilience
The last two years have been a rollercoaster for UK manufacturers who have ridden the troughs of a severe loss in output to record lows, followed by a rebound in demand which has seen them reach record highs. The manufacturing industry is one of the few sectors of the UK economy that remained open during the pandemic. UK manufacturers have proved their resilience and agility beyond any measure, helping to keep the UK economy moving.
Demand has remained strong and the outlook for growth in, and exports to all the major markets is positive. However the challenges from the last twelve months will persist into 2022, in particular access to talent and supply chain disruption which have both been in the spotlight.
Manufacturers are also focusing on environmental, social and governance (ESG) priorities,viewing this as an investment that creates value and drives improved results in the short and long term, with as many as a third accelerating their plans to transition to net zero in response to COP26.
This year's Make UK executive survey in association with PwC demonstrates with the rapid adoption of new technologies and investment in people, the role of the sector at the heart of the UK economy’s recovery is now as clear as it has been for some time. The time to back UK manufacturing is now.
Almost two-thirds (64%) of manufacturers agree that 2022 will see their business focus more on net zero, and this is evident from the increased investment in green technologies that manufacturers have planned.
Investing in green technologies will be crucial not just to the success of the sector’s transition to net zero, but also to helping develop the products and services that will support the wider economy to meet that all-important 2050 net zero target.
Skills and talent dominated the risk factors companies were facing with access to Labour seen as the biggest risk by almost two thirds of companies (58%), while almost nine in ten companies were not just worried about losing skills from their business but the sector entirely.
Encouragingly, despite the current financial challenges almost half (45%) of companies said they still planned to invest in apprenticeships in 2022 and pay and progression is key to retaining staff in 2022.
Manufacturers have not only grappled with a new trading relationship with the EU but have also dealt with difficulties across their supply chains and have had Covid-19 recovery to contend with.
While UK manufacturers continue to be resolute and are trading and working with our European partners with emerging optimism that some of the processes are becoming more ‘business as usual’, 66% state that leaving the EU has hampered their business.
The need to build resilience into business models has been highlighted by supply chain shortages, the survey shows around a third of companies (35%) are planning to counter this by using British rather than international suppliers, while almost a third (31%) said they were planning re-locate some or, more of, their production back to the UK.
“Manufacturers are responding to the challenges of the last 12 months with an impressive amount of agility and resilience, which will stand them in good stead for the year ahead. They have learnt valuable lessons about their supply chain vulnerabilities and the resilience needed to respond to unforeseen international or domestic risks, and are strengthening their businesses digitally as well as continuing to focus on talent and skills.”
M&A Deals Partner, Private Business leader for PwC Northern Ireland, PwC United Kingdom
Tel: +44 (0)7809 551517
