The publication of this year’s ‘UK Manufacturing, The Facts 2020/21’ – a detailed analysis of UK manufacturing - feels more poignant than ever before. At the start of this year manufacturers were already grappling with the prospect of a no-deal Brexit, without the unforeseen and devastating impact of Covid-19.
The pandemic is likely to have a detrimental impact on UK and global manufacturing, the full weight of which is yet to be felt. But this year’s ‘UK Manufacturing, The Facts’ data, which was captured before the worst of the outbreak, points to a vibrant and thriving industry - one which generates significant R&D investment, pays far above the average wage and accounts for a significant amount of total UK exports.
As manufacturers continue to battle the negative headwinds of Covid-19, I feel it is crucial to take stock of their importance and to reiterate the necessity of placing UK manufacturing at the heart of recovery plans.
UK Manufacturers deliver £191 billion of output, and the goods produced account for 53% of the UK’s total exports - an increase from 44% last year. We remain in 9th place in the world manufacturing table, which may come as a surprise to some who don’t realise that Britain is still very much a major global player when it comes to manufacturing.
The scale of the sector is further emphasised by the 2.7 million jobs that it supports but more than the number is the fact that, as a sector, the average salary at £34.5k is 13% higher than the rest of the economy. From my travels, in normal times of course, I well know that we make goods right across the UK. The North West region may lead the way in output and employment numbers, but each region is well represented and has a subsector focus.
The next few weeks will see negotiations recommence on the terms of our exit from the European Union. Like most manufacturers I have everything crossed that a deal is agreed that avoids unnecessary barriers to trade. According to ‘UK Manufacturing, The Facts 2020/21’ – 7 of our top 10 export destinations remain in the EU, so while we are keen to help business look to new global markets, there is no doubting how important the trade with our near neighbours remains.
As I reflect on the latest stats I can’t help but think about how Covid-19 will reshape these figures when we look back in 12 or 24 months’ time. The pandemic is global, so we are not in this alone, but how we respond to the challenges of the coronavirus in the coming months will shape us for years to come. Other nations are providing more direct support to their manufacturers - a policy that the UK has not followed for many years.
With this background it is probably more important than ever that we all support the investment in Research & Development within the sector. It already accounts for 65% of all UK R&D but with only 16% of total business investment spent in manufacturing, there is scope to push this higher in targeted areas of automation and technology to improve our productivity and general competitiveness.
While Covid-19 presents significant issues, manufacturers’ hunger to survive and willingness to adapt has already been made evident. I hope that 2021 brings swift recovery and opportunities for growth and we at Santander are here to support manufacturers every step of the way.