UK manufacturing: A renewed growth or just a temporary fluctuation?
Photo by cottonbro studio
Is the UK manufacturing industry actually making a comeback? The first quarter of this year shows some promise with domestic and global markets stepping up their game while at the same time helping to ease great recession worries. This information comes from a survey by Make UK and BDO – revealing that the situation in Q1 looks way brighter than it did in the last quarter of 2022. Other data like UK and European PMIs are showing similar trends – but they’re still just barely hanging in negative territory.
Electronics & mechanical equipment: Shining stars
The booming demand in electronics and mechanical equipment sectors – particularly in electronics orders (+64%) is attributed to several factors, including companies’ increased investment in digitalisation and added capacity to address labour shortages. Vertical conveyors play a crucial role in meeting this surge by offering an efficient solution for transporting goods between different levels–optimising production processes and helping businesses take advantage of the super deduction scheme. The growing overseas demand for electronics goods (+67%) – especially from EU neighbours further highlights the importance of vertical conveyors in these thriving industries.
Investment balance: Looking up
Even before the Budget Statement announcement on full expensing, there was already an improvement in investment balance overall; however, since the average investment cycle for manufacturers is around seven years – according to Make UK – making full expensing permanent would better reflect manufacturers’ needs.
Caution ahead: Challenges looming
Although things seem great right now, Make UK and BDO warn us not to assume everything’s all peachy-keen–forecasting a contraction for manufacturing in 2023 as existing challenges show no signs of letting up anytime soon. Fhaheen Khan from Make UK says that while business confidence has indeed improved with better market conditions we shouldn’t jump to conclusions just yet given significant economic challenges ahead. He also mentions that making full expensing permanent would do wonders for manufacturers’ investments.
Richard Austin, BDO’s national head of manufacturing, highlights that recent government announcements don’t do much to tackle immediate issues like heavy energy costs. He points out that UK manufacturers need ongoing certainty on things like long-term energy costs, gigafactory development commitments and help attracting a sustainable workforce.
Despite some positive news–like the booming demand for electronics and mechanical equipment–inflationary pressures are still very real for UK manufacturers. The data shows conflicting indicators, suggesting an industry at a crossroads. Only time will tell which path will be taken in the coming months.
