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Two-thirds of manufacturers say Brexit has hampered business

Professional Engineering

Stock image. Two-thirds of UK manufacturers say Brexit has hampered business, and more than half fear further issues in the year ahead (Credit: Shutterstock)
Stock image. Two-thirds of UK manufacturers say Brexit has hampered business, and more than half fear further issues in the year ahead (Credit: Shutterstock)

One year after the UK completed its exit of the EU, two-thirds of British manufacturers have said that Brexit has hampered their business ‘moderately or significantly’.

Despite increased positivity for the year ahead, more than half (56%) fear a further negative impact in 2022, from customs delays due to import checks and changes in product labelling.

The business sentiments were collected in the 2022 Make UK/ PwC Senior Executive Survey, published today (10 January).

The survey “shows the scale of uncertainty facing business in the current turbulent global environment,” a Make UK announcement said. More than half of companies said the biggest challenges facing them had changed in the last twelve months. Their optimism was also tempered by escalating inflationary pressures, and concerns over access to talent and key skills.

The majority of manufacturers were nonetheless positive about the year ahead, with almost three-quarters (73%) believing conditions for the sector will improve in 2022. The same number believed the opportunities for their business outweigh the risks. The sector appears to have seen little or no disruption from the Omicron variant to alter this confidence, Make UK said.

Almost two-thirds (63%) of companies felt the UK to be a competitive location for manufacturing, with just 13% saying it is an uncompetitive place to do business.

To take advantage of these opportunities, manufacturers are prioritising improving productivity and investment in people, as well as new product development, while the recent Cop26 summit appears to have accelerated investments in the drive for ‘net zero’.

Make UK chief executive Stephen Phipson said: “It’s testament to the strength of manufacturers that they have emerged from the turbulence of the last couple of years in such a relatively strong position. While clouds remain on the horizon, in the form of rapidly escalating costs and access to key skills, the outlook is more positive for those that remain adaptable, agile and innovative.

“To build on this we now need to see a government fully committed to supporting the sector at home and overseas. This requires more than a Plan for Growth, but a broader industrial strategy that sets out a long-term vision for the economy, and how we are going to achieve consistent economic growth across the whole country.”

Two-fifths of companies forecasted growth in exports to the United States, closely followed by the EU. About a quarter (26%) are aiming for growth in Asia and around one in five in the Middle East (21%). The EU market is set to see the biggest decrease in exports however, with 10% of companies forecasting a decline.

Up-skilling or retaining existing staff was the biggest priority for about two thirds of companies (67%) followed by new product development (60%) and capital equipment (54%)

Access to labour was seen as the biggest risk by almost two thirds of companies (58%), while almost nine in 10 companies were worried about losing skills from their business and the wider sector. Despite the current financial challenges, almost half (45%) of companies said they still planned to invest in apprenticeships in 2022.

About a third of companies (35%) are planning to counter supply chain shortages by using British rather than international suppliers, while almost a third (31%) said they were planning to relocate some or more of their production back to the UK.

Half of companies (49%) said they plan to invest in green technologies or energy efficiency measures in 2022, with a third saying this investment has already increased. A third also said the transition to net zero had been accelerated by the recent Cop26 conference.

Cara Haffey, PwC’s UK industrial manufacturing and automotive leader, said: “Despite facing an unprecedented combination of continued Covid pressures, cost inflation and supply chain issues, our manufacturers are responding with an impressive amount of agility and resilience, which will stand them in good stead for the year ahead.

“They have learned 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.

“We are particularly pleased by the breadth of net zero ambitions reflected in the report. Across the UK we’re seeing an increasing number of businesses underpin their environmental, social and governance strategies with practical applications to decarbonise their operations, and ambitions to build out their green skill base through the recruitment of 'green' jobs, a move that has already been flagged as outperforming the UK sector average in our recent Green Jobs Barometer.”

Make UK forecast manufacturing growth of 6.9% in 2021, and has predicted growth of 3.3% in 2022.

The survey of 228 companies was conducted between 27 October and 22 November 2021.

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Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.


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