Food sector set for hiring bonanza
3 Sep 2015
Local food and drink producers expect to create more than 73,000 new jobs over the next five years, according to research compiled by Lloyds Bank Commercial Banking.
The report on the investment plans of food and drink manufacturers in England and Wales reflected confidence, but also highlighted some key challenges.
The volatile price of raw ingredients, rising energy costs, and a possible exit from the EU are all expected to have a substantial impact on the sector in the next five years.
This report confirms that trading internationally is a real driver for growth, especially the opportunities offered by non-EU markets and developing economies
Ian Wright, director general at the Food and Drink Federation.
Of the respondents, 44% said a possible exit from the EU would be the biggest challenge for the industry, and 35% believed the same of rising energy prices.
A smaller percentage (30%) named volatile raw ingredient prices as the most challenging factor, while 28% pointed to the lack of skilled labour in the sector, which faces the imminent retirement of hundreds of thousands of workers.
Nevertheless, the report reflected growing confidence across the board with 100% of respondents predicting growth in the next five years, compared with 98% last year.
“The contrast between the 2014 report and our latest research is really positive, with significant job creation and investment figures revealed,” said Andrew Connors, head of mid-sized business at Lloyds Bank Commercial Banking.
“Productivity presents an ongoing challenge for the UK economy. Against this backdrop, the continued commitment from food and drink manufacturers to drive productivity and innovation through R&D is a clear indication of the crucial role this sector plays in the broader economy,” he said.
Beating adversity
Many firms said they planned to offset some market challenges by developing innovative new products and increasing export activity.
While mergers and acquisitions were highlighted as akey growth driver among the largest players, the rest of the field was focused on entering new markets in the UK (56%) and developing new products (55%), to satisfy growth ambitions.
Most respondents (53%) will fund expansion using existing cash reserves, and half plan to form partnerships with other companies in their supply chain to develop new products, streamline manufacturing processes and boost productivity.
Just over a third (34%) are planning to drive business growth through job creation, and more than 73,000 new jobs are expected to be created in the sector over the next five years.
Export ambitions
The report also revealed that the number of businesses planning to export rose 9% from last year to 72%, with most planning to enter new international markets in the next five years.
Western Europe remained the most popular export market (60%), though the number targeting this region fell 16% from last year.
North America knocked the Far East and Asia (43%) from second place in this year’s report, with 49% looking to export products there, driven by significant demand for dairy products – in particular cheese.
“This report confirms that trading internationally is a real driver for growth, especially the opportunities offered by non-EU markets and developing economies,” said Ian Wright, director general at the Food and Drink Federation.
