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New Manufacturing Outlook and Digital Transformation reports

New Manufacturing Outlook and Digital Transformation reports

At Sharing in Growth’s 2019 All STAR best practice event, Seamus Nevin Chief Economist at Make UK presented his insights into the outlook for the manufacturing sector. Here we look at the two latest reports from Make UK and accountants BDO to better understand the challenges faced in the UK manufacturing sector.

The Q2 Manufacturing Outlook survey published by Make UK and BDO LLP, shows that whilst domestic and export orders are in positive territory they are trending downwards as the boost of artificial stockpiling winds down and overseas customers are switching their supply chains away from the UK.

As a result, investment by the sector has been paralysed with no evidence that there is pent up demand waiting to be unleashed and, whilst business confidence has held up with the relief of ‘no deal’ being avoided twice it remains below the levels seen ahead of the EU referendum in 2016.

Said Seamus: “Whilst domestic and exports orders are still in positive territory there is a clear weakening trend which, if it continues, would push some elements of industry over the edge before too long.

“Earlier this year there was clear evidence that industry was on steroids as companies stockpiled. Underneath, however, there is growing evidence of European companies abandoning UK supply chains whilst Asian customers balk at the unknown of what may exist as the UK leaves trade agreements which operate under EU rules.

“With this picture it would be the height of economic lunacy to take the UK out of the EU with no deal in place. This race to the bottom in the interests of party ideology has to stop otherwise there will be a heavy price to pay.”

Q2 Manufacturing Outlook survey headlines

The second report from BDO – Digital Transformation – examines and explains how UK manufacturing is responding to digital disruption and how businesses are embracing and successfully implementing digitalisation.

It looks at the key drivers and barriers in developing and implementing successful digital strategies and explores the extent to which technologies from AI and blockchain, to 3D printing, 5G technology and IoT are being embedded by manufacturing firms. Finally, the report looks into government support and the skills challenge of delivering a digital workforce.

The key findings are:

  • Almost one in five manufacturers have little or no understanding of Industry 4.0 technologies and digital transformation in manufacturing
  • Less than half have started to implement a digital strategy
  • More than 70% believe they do not have the right workforce with the right skill sets to integrate Industry 4.0 technologies into their business
  • More than 80% think greater connectivity will increase the risk of cyber security breaches for manufacturing businesses
  • Businesses said the government could better support manufacturers in implementing Industry 4.0/digital transformation through:
    • Tax simplification to encourage investment
    • A 20-year sustainable Industrial Strategy
    • Support for implementing technologies
    • Better education to deliver digital skills
    • More government grants and loans
    • Education on the benefits of digitisation.