Engineering news
Collecting the views of more than 200 senior executives across manufacturing, the 2023 Make UK/ PwC Executive Survey shows the scale of uncertainty and increased costs that companies continue to face.
Of the surveyed manufacturers, 70% expect energy costs to rise significantly this year. 20% expect them to increase moderately, while 9% expected them to remain the same and only 1% predicted a decrease.
Blackouts in the coming months are also an increasing concern for 60% of manufacturers, because of security of supply issues. These could cause “considerable damage” to products and processes, the report said, potentially adding even more costs.
“The year ahead is going to be very challenging for manufacturers,” said Stephen Phipson CBE, chief executive of manufacturers’ organisation Make UK. “Ongoing supply chain disruption, access to labour and high transport costs, which show no sign of abating, can be added to a growing sense of economic and political uncertainty in their main markets.
“The biggest risk, however, remains the eye watering increases in energy costs which has left the clock ticking for many companies. As a result, government must do all it can to shield companies from the worst excesses of these increases and that means leaving everything on the table, including an extension to the energy relief scheme.”
Those hopes might not be met however, after the government announced plans to reduce support for businesses. Companies will get a discount on wholesale prices instead of the capped costs under the current scheme, the BBC reported today (10 January) – although sectors with higher energy use, such as glass, ceramics and steelmakers, are expected to receive a larger discount than others.
Cara Haffey, manufacturing leader at professional services firm PwC UK, said: “UK manufacturers are resilient by nature, however we face another 12 months where it's likely that global supply chains will remain stretched and a string of pressure points will continue to spring up, from sourcing and purchasing to fulfilment and distribution.
“All of this, plus the need to continue to refine our relationship with the EU – especially in regards to the movement of people – will see manufacturers facing a packed and somewhat daunting to-do list.”
Energy efficiency measures and upskilling and retraining staff are some methods that manufacturers are using to keep costs low, PwC said.
The findings of the survey will be discussed at a webinar next Tuesday (17 January).
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Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.