Engineering news
UK manufacturers are seeking out the benefits of Brexit, with more than half taking advantage of the weaker sterling and 44% refocusing on internationalisation, according to a report by accountancy and business advisory firm BDO, in association with the Institution of Mechanical Engineers.
Despite more than half (51%) of UK manufacturers still believing the UK’s decision to leave the European Union would have a negative impact on the manufacturing sector and their business, the report finds that they are determined to not let it dent their growth ambitions and are not putting investment plans on hold.
According to the BDO/IMechE research, a weaker sterling was cited by 51% of respondents as a key opportunity for growth. Low interest rates (20%) and a lower regulatory burden (17%) were also seen as benefits to their business. However, two thirds (67%) of respondents highlighted currency volatility and a changing political landscape (42%) as the two biggest risk factors to manufacturing caused by the Brexit vote.
Looking ahead, internationalisation is central to the strategy of 44% of the businesses surveyed with more than one third (39%) saying they will target markets outside of the EU as a result of the Brexit vote.
When questioned on the impact the vote may have had on investments, 65% of manufacturers said they are making no plans to reduce their investment intentions. Of those that are, however, reducing spend on outsourcing (14%) was the most popular choice.
Meanwhile, 60% of manufacturers said they intend to invest in research and development (R&D) and innovation. However, 82% of the survey respondents stressed the importance of government continuing R&D and innovation funding in the engineering and manufacturing sector.
Worryingly, 45% of manufacturers have little or no confidence that the current government can negotiate a favourable trade deal with the EU. The report found that 37% favoured the UK remaining a member of European Economic Area, which would include access to the single market, free movement of people, financial contribution to the EU and accepting some EU regulation.
According to the report, when questioned on an industrial strategy, the single most important factor for UK manufacturers, at 79%, is to have a long-term strategy with a 15-20 year horizon. An education overhaul was stated as necessary part of the strategy to deliver future employees and skills by 69% of respondents, while 60% said improved tax incentives would be key, and 50% opted for a dedicated minister for manufacturing.
Tom Lawton, head of manufacturing at BDO, said: “The UK manufacturing sector remains critical to the future success of the UK economy. Despite uncertainty at home and abroad, it is promising to see firms are pushing forward and adjusting their business plans to make the most of the opportunities available.”
Philippa Oldham, head of manufacturing at the Institution of Mechanical Engineers, said: “Manufacturers are clear that they need confidence in the skills pipeline and the country’s industrial strategy, in order to properly prosper. As the UK gears up to leave the EU, this is more important than ever.”
To read the full Manufacturing Prospects report click here