Industry slashes investment in fight for survival - Make UK/BDO survey
The Make UK/BDO Manufacturing Outlook Quarter 3 survey shows that whilst the sector has climbed off the bottom there is no evidence of V shape recovery.
Key findings:
Output and orders improve but still way below historic averages
Significant cuts to investment while employment prospects weaken
Forward looking indicator suggest conditions will improve albeit slowly
Just under a fifth of companies operating at full capacity, rising to just over a quarter expected to be by the end of the year
Industry forecast to contract by more than 10% in 2020 with forecast recovery for 2021 downgraded
All regions and nations, barring Scotland, have reported positive, albeit marginal, business confidence this quarter. This tempered positivity reflects the UK’s exit from the strictest of the lockdown measures which created a very difficult operating environment for manufacturers in the UK.
In this quarter’s research, the grouping of these confidence values is tight, telling of the homogeneity of some of the operational challenges businesses face throughout the country. Barring another UK-wide lockdown, confidence would be expected to creep upwards in a similar vein to that of orders and output.
Manufacturing has begun to climb away from the abyss that it stared into earlier in the year. But, make no mistake it is going to be a long haul back towards normal trading conditions, with talk of a V shaped recovery nothing more than fanciful.
Having emerged from three years of political uncertainty at the end of last year, increasing talk of a final ‘no deal’ exit from the EU would be a final nail in the coffin for many companies. If we are to avoid this and, the avalanche of job losses that would follow in already hard hit areas and sectors, it is essential that the first step towards a fuller recovery is provided by a comprehensive trade agreement with the EU.
Stephen Phipson CBE
Chief Executive, Make UK
No-one is in any doubt about the financial challenges facing manufacturers, but turning the investment taps off now will have serious medium to long term implications. The Government must be alive to this risk and provide the support required to help UK manufacturers through this transition period and beyond. Other countries (perhaps in particular Germany) do provide good examples of consistent long term support to their manufacturing sectors. The UK should look to adopt a similar approach.
