Outlook remains bleak for manufacturing
11 Jan 2016
Manufacturers in the UK are expecting 2016 to be fraught with tough decisions and risks, one industry survey suggests.
Manufacturers’ organisation EEF reveals in its annual Executive Survey that confidence among manufacturers is continuing its downward trend, as 44% of companies surveyed said they face more risks than opportunities over the year ahead.
According to the EEF, this “pessimistic view” is felt most keenly among larger firms.
“The gloom that took the shine off UK manufacturing’s performance in 2015 is set to continue into 2016”
A key driver of this view is the current global economic volatility, with many manufacturers highlighting exchange rates (42%), economic volatility in a major market (36%) and uncertainty around the UK’s place in the EU (36%) as major risks they could face this year.
Though 23% of those surveyed expect economic conditions to improve in 2016, the survey reveals expectations are “substantially lower” than at the start of 2014, with a 14% decrease in those who see the UK as a competitive location for manufacturing.
“The gloom that took the shine off UK manufacturing’s performance in 2015 is set to continue into 2016,” conceded Terry Scuoler, EEF chief executive.
Despite the gloom, however, the survey does contain some positive news.
Indeed, 55% of manufacturers expect to increase productivity in 2016, while over 40% expect to boost UK sales (43%) and export sales (43%).
To support growth, manufacturers will focus be on increasing investment in technology and innovation (41%), selling into new export markets (39%) and collaborating with customers and suppliers to ensure supply chain flexibility (37%), EEF said.
“There is particularly good news about the number looking to prioritise investment in technology and innovation and those looking to explore new export markets. These are positive and proactive steps,” Scuoler said.
Manufacturing companies will still, however, have to make “tough decisions” this year.
As a result, organisational changes (35%), workforce restructuring (34%) and ‘across the board’ cost-cutting (31%) all feature on manufacturers’ list of company priorities for the year ahead, the survey reveals.
“Restructuring and cost-cutting efforts are clearly high on the agenda for some,” Scuoler suggested.
The survey, now in its fifth year, was published alongside Aldermore, a small and medium-sized enterprise-focused bank.
