Firms focus on new products, building resilience and agility to counter risks
- Third of companies believe investment prospects for the UK will decrease outside EU
- Ability of UK to attract international talent to fall
- Customs delays and increased costs of regulation among biggest risks to supply chain
- Fears of national and local lockdowns seen as second biggest risk
- Quarter of companies look to re-shore overseas activities
- Investment in new products, digital technologies and training builds resilience
- Productivity and recruitment to pick up
However, despite this, more companies believe the opportunities outweigh the risks for their businesses given significant investments in boosting productivity and agility, while manufacturers are also more confident about the prospects for their own companies than they are for either the global or UK economies.
Furthermore, a third also believe the UK’s ability to attract international talent will decrease with just 11% believing the UK will be a more attractive destination outside the EU. According to Make UK this potentially puts at risk the ambition of the Government’s new immigration system which is specifically designed to encourage the best talent to come to the UK.
The survey also shows that customs delays are seen as the biggest risk to companies (47%) while concerns over national and local lockdowns were the second biggest risk (46%). Furthermore, increased costs of regulation is reported as the biggest risk by just under forty per cent (39%) while over one in 10 companies (14%) also believe a relocation of a major customer out of the UK is their biggest risk.
Despite the concerns over the new trading relationship with the EU and the attractiveness of the UK 48% of companies see a significant or moderate improvement for manufacturing in 2021.
This is in contrast to how they see the prospects for the UK economy where 56% see a deterioration, while 46% are more negative about the prospects for the global economy.
Furthermore, this positive outlook was echoed at individual company level with more than half (51%) believing the opportunities outweigh the risks to their businesses compared with 27% who believe the risks are greater. As a result of this, after the falls in 2020 in response to the pandemic, recruitment is forecast to pick up - with 44% of companies expected to increase employee numbers compared to 25% who are planning to reduce headcount.
The survey also provides encouraging indicators on the strategies manufacturers are adopting to build resilience and agility into their business by investing in people, new products, markets and technologies.
While controlling costs remains the biggest priority for companies, 57% of manufacturers are investing in new product development with a similar number also planning capital investment, both of which encompassing a significant commitment to digital technologies. Encouragingly, a quarter of companies are looking to re-shore overseas activities while 25% are looking to identify new or additional suppliers in the UK as a high priority.
People also feature highly on company strategies with 44% committed to training and 37% investing in Apprenticeships despite the difficulties caused by the pandemic. As a result of these investments 54% of companies are expecting to see an increase in their productivity in 2021.
Despite the impending EU exit suppressing European export expectations for next year, manufacturers are already demonstrating the agility required to navigate the uncertain trade environment by proactively seeking out novel export opportunities in fresh markets, looking to diversify their trade income streams and build in further resilience to future crises.
Almost a third of companies (30%) are planning to enter new markets in 2021. This will see the UK’s trade patterns shift for while they are predicting exports to the EU will fall, almost 40% of companies are looking to expand sales in to non-EU markets with increases to Asia (27%) and the United States (28%) the biggest targets.
The survey of 206 companies was conducted between 11 and 30 November 2020.