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UK manufacturers sense an Eastern threat

01 January, 2005

UK manufacturers sense an Eastern threat

In the four years since 2001, the proportion of British manufacturers who see China as the biggest threat has jumped from just 18% to 57%, according to a new study. The survey, conducted by the manufacturers` organisation, the EEF, reveals that after China, the biggest perceived threats for the next five years come from Central and Eastern Europe (27%) and from India (18%).

In a similar survey in 2001, 53% of respondents thought the biggest threat would be from the EU, while 17% cited North America. The latest figures are 17% for the EU and just 8% for America.

To counter the perceived threat from the low-cost Eastern economies, UK companies are adopting a twin-track approach of putting more emphasis on innovation and outsourcing abroad to cut their costs.

Almost half of manufacturers surveyed expect to rely more on production outside the UK over the coming five years. A further fifth are considering outsourcing. In addition, two-thirds of companies said they were boosting innovation, with 46% saying they were also developing niche markets and customising their products.

"These results prove that manufacturers are well placed to succeed in an increasingly competitive environment by adopting strategies which focus on adding value in the UK, while making best use of the options that low-cost manufacture overseas gives them," says EEF director-general, Martin Temple. "However, we must ensure that companies who go down this route are doing so as part of a long-term business plan and not because they perceive the UK as a poor location for manufacturing.

"The figures also provide a stark warning that the low-cost economies of the East are arriving like an express train," Temple adds. "If UK and EU policymakers do not commit to measures that will free up enterprise and make their economies more dynamic, there is a grave danger the Eurozone will be left standing on the platform."

The survey is part of an EEF report on the challenges facing industry called Where now for manufacturing?

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