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UK manufacturers are split in their opinions

27 June, 2012

A survey of more than 500 senior personnel in the UK manufacturing and process sectors has revealed that their opinions are split on the economic climate, the appetite to invest, and on the need for greater government support for the sector. The respondents place the UK in the top three nations for manufacturing innovation (behind China and India), but 51% feel that the UK is not as advanced as it could be in industrial automation, and must invest more in this area.

The report, called Industry Pulse – Challenges and Outlook for Manufacturing has been produced for Siemens Industry. It reveals that more than a third of the manufacturers surveyed (38%) lacked the confidence to make large-scale investments during the recent economic downturn and nearly three-quarters (72%) of these companies say that this has now led to a business-critical need to invest.

As a result, 41% of UK manufacturers are planning to increase their investment levels in the year ahead, but 51% have no plans for further investments.

There are also varying levels of confidence across the sector, with half of the manufacturers saying they are optimistic about their performance in the coming 12 months, while 16% are pessimistic, and the remaining 34% are neutral.

This is reflected in contrasting views on the risk of a double-dip recession. Almost half (48%) are concerned about a significant reversal in economic growth, but the remaining 52% do not share this worry.

The research also reveals that 69% of manufacturers say that their order volumes have been driven by domestic rather than overseas demand, suggesting the UK economy is taking time to rebalance.

Almost half of the manufacturers surveyed (46%) believe that Government-backed initiatives such as Make it in Great Britain and the launch of the Manufacturing Advisory Service are helping to boost morale in their organisations. A quarter (26%) of smaller firms feel that the Government needs to do more, while nearly half (47%) of businesses with more than 500 employees feel that Government-backed schemes have boosted morale. Despite this, 62% of smaller firms are still optimistic about their performance over the next 12 months.

Commenting on the findings of the research, Juergen Maier, managing director at Siemens Industry UK (above), said: “There is a lack of consensus across the sector and, in light of recent data, this gives us cause for concern, as industry has a central role to play in helping to rebalance the economy. In order to do this, we have to be joined-up and agree on the priorities for achieving export-led growth.

“UK manufacturing placing itself in the top three globally for innovation shows the commitment and pride of UK manufacturers – which is great,” he continues. “There are strong levels of optimism too, especially among smaller firms and those in the domestic supply chain. However, there are some clear challenges to overcome so we can claim this leading position globally and use it to grow the sector.

“Two such areas for focus are investment in skills and manufacturing automation technologies, for which global statistics show us that we are not in third place just yet,” Maier adds. “For example, we invest nearly a third less than the German manufacturing sector in capital plant machinery and automation and our skills system is definitely still not efficient enough.

“We need to better understand that, as a sector, investment in modern and sustainable production technologies makes an important contribution to energy savings and improved productivity – hence boosting a company’s competitiveness and this is essential for the growth of our manufacturing sector supply chain.

“The fact that confidence is erring on the optimistic side is encouraging and Siemens Industry UK is committed to working with fellow manufacturers to tackle the challenges ahead,” Maier concludes. “It’s good to see that campaigns such as Make it in Great Britain are making a difference for a significant proportion of manufacturers. I really believe this kind of support can be transformational, not only in increasing morale, but also impacting on the bottom line. However, to do so, they need the weight of industry behind them, so we can move toward the UK exporting its way into a solid recovery.”

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