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Companies are most optimistic about the global economic outlook since 2014, a new survey from manufacturers’ organisation EEF and insurers AIG revealed today. The Executive Survey shows 40% of manufacturers are planning for growth in their industry this year, compared to 19% predicting deterioration.
A majority of industry executives expect better domestic and international sales, new jobs and better profit margins for the first time in three years. However, the threat of rising costs and volatility in the pound as Brexit negotiations continue, and the potential for other international events such as a sharp slowdown in China, means more than a quarter (26%) of companies see more risks than opportunities for the year ahead – up from 23% last year.
“Manufacturers left 2017 in an upbeat mood and are set to outpace the rest of the economy again this year, as the growth in global trade continues to gain momentum. That is not to say everything in the 2018 garden is rosy, however, as there are plenty of factors that could puncture this positive picture,” said EEF chief executive Stephen Phipson.
“Chief amongst these is Brexit, which has put the investment outlook on a knife edge. As such, it is essential that the government gets a transition deal as a matter of urgency and sets out with utmost clarity as to what kind of final deal it is looking for.”
It must also push ahead with implementing the recently-confirmed Industrial Strategy, Phipson added, to help manufacturers improve productivity and enter new markets. The strategy, aimed at making the UK “the world’s most innovative nation by 2030,” includes prioritising rapid adoption of artificial intelligence (AI) and adapting best practice from the automotive sector to improve supply chains.
While fears around Brexit uncertainty feature highly, cyber-security threats are also front of mind for executives, said Simon Gallimore, manufacturing industry UK lead for AIG. Last week, widespread flaws in millions of computer chips once again highlighted the hazards companies face, with one cyber-security expert telling Professional Engineering that hackers could potentially access factory machinery controls to cause harm.
“A cyber-attack can swiftly interrupt the supply chain, potentially causing severe disruption to manufacturers,” Gallimore added. “As technology and data start to play increasingly critical roles in the industry, companies will inevitably find themselves more vulnerable to cyber breaches… robust cyber security measures and thorough employee training on cyber-security are vital to help protect against the increasing threat of attacks.”
Half of companies plan to increase worker numbers despite a simultaneous shift to more automation, with 72% of UK manufacturers planning to boost investment in the technology to increase productivity.
While 38% of companies fear the potential loss of EU citizens due to Brexit, 7% are planning to move production to elsewhere in the bloc and 6% plan moves elsewhere. However, 12% plan to move production back to the UK from the EU and 22% are increasing UK investment.
Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.