73% of UK manufacturers predict an increase in sales turnover by Autumn 2023, despite economic challenges
SWMAS Q4 2022 Manufacturing Barometer
Manufacturing CEOs, Directors and Managers reveal the industry’s future growth and investment priorities in the latest UK Manufacturing Barometer by SWMAS (The South West Manufacturing Advisory Service).
Whilst firms reported that supply chain price changes (89%) and energy costs (82%) are causing the greatest negative impacts for manufacturing businesses, the number of firms struggling with inflation has reduced by 4% compared to last quarter’s findings, indicating early signs of relief.
Manufacturers are taking action to address rising costs by implementing process efficiency improvements (66%) and considering the use of different suppliers (61%). As a direct cause of rising supply chain costs, 17% of manufacturers plan to bring production back in-house.
Despite these ongoing challenges, the manufacturing industry’s investment plans are optimistic. More than half (52%) of respondents are experiencing increased levels of trade compared to their pre-covid position. Furthermore, 44% of manufacturing organisations have experienced an increase in sales turnover in the past six months, with 74% predicting a further increase in sales turnover over the next six months.
Nick Golding, Managing Director of SWMAS, says, “The increased optimism around future sales is positive. However, with firms continuing to invest in inventory to buffer challenges with supply chains, and a third of respondents indicating customer orders are being delayed or starting to be cancelled, companies need support to ensure that planned future investments are not constrained as a result of cash being tied up in inventory which is then affected by order cancellations or delays.”
When looking at skills shortages, 72% of manufacturers agree the lack of suitably skilled staff is still causing a negative impact to business, resulting in a shift in priorities to invest in employee training and upskilling, as reported by 68% of firms.
Nick continues, “With increasing calls for an industrial strategy for manufacturing, support for the sector is needed to respond to increasing international competition. With the US launching the inflation Reduction Act and the EU responding with subsidy support for growth sectors such as green technologies, the government needs to support manufacturing to avoid the UK missing out on these huge opportunities for growth. Many SME companies are part of global supply chains, but with the majority of firms focused on the domestic market, it is vital that the UK attracts major investors for these future growth industries to support the wider manufacturing sector.
“The government is repeatedly talking about Advanced Manufacturing as a subset of the sector, but this does not recognise the significant capabilities and investments that SMEs are making in automation, digitisation and systems, to create advanced manufacturing production systems. Advanced Manufacturing is not a subset of the manufacturing sector as a whole, but is underpinned by a growth mindset of the leaders of manufacturing firms who invest in the latest technology to remain competitive.
“The latest figures show that the majority of firms (52%) are looking to increase capital investment in the next six months – and anything that can be done to provide support to a sector which is vital for both domestic security and supply can only be a good thing. Previous Barometer surveys have repeatedly highlighted that the number one request for support is a government-backed manufacturing scheme to recognise the industry and help drive this forward. It would be a good start to recognise the investments being made and treat these firms as advanced manufacturers. Support from government could help in terms of changing the mindset towards the industry, supporting attraction of staff into the sector and driving further economic growth through increased confidence in UK manufacturing.”
To read more and view the full report from April’s survey, please visit: https://www.swmas.co.uk/knowledge/national-2022-q4
To find out more about SWMAS, please visit: www.swmas.co.uk.