Manufacturers are confident for the future, but expect a rise in costs

Small and medium-sized manufacturing companies in the UK are confident that their revenues will grow in the coming year, despite Brexit uncertainties and rising costs, according to a report.

The sixth annual MHA Manufacturing and Engineering report, in association with the IMechE and Lloyds Commercial Banking, surveyed hundreds of companies in the manufacturing and engineering sectors. It found that 69% of manufacturers reported revenue growth over the past 12 months, and 78% are predicting growth over the 12 months to come.

However, 94% said they were expecting further increases in production costs, and a growing number said those would be passed on to customers. Brexit remains a source of anxiety, with 20% of respondents stating that they had lost staff or were at risk of losing staff because of the vote to leave the European Union.

“The resilience and optimism of manufacturers and engineers, highlighted by our survey, is a massive positive for the UK in this most uncertain world,” said Chris Coopey, head of the manufacturing group at MHA. “Despite the challenges they face, such as skills shortages and the impact of the large drop in the value of the pound increasing raw materials and components costs, the sector remains buoyant.”

However, he also noted that the growing skills crisis in UK manufacturing is being exacerbated by the loss of skilled and unskilled staff from the EU. Three quarters of manufacturers said they could not recruit appropriately skilled staff, and called for government action.

Philippa Oldham, the IMechE’s head of manufacturing, was one of the report’s contributors. She said it was encouraging to see such optimism and confidence, but struck a warning note too: “The results raise a cautionary flag to government that, as we press ahead with Brexit, they must consult closely with the manufacturing sector to ensure concerns over R&D and skills are addressed as part of negotiations with the EU to obtain an optimum outcome.”