Manufacturing resilience and buying British

Mark Hughes
24 October, 22

It is an uncertain time for British manufacturers and the supply chain that services them. A recent survey of 238 British manufacturing companies by the Confederation of British Industry (CBI) and Accenture found that manufacturers are expecting a sharp fall in their output over the final three months of 2022 due to the weakest forecasts for growth since the height of the pandemic. But this isn’t the case for everyone, and there are several sectors that are seeing things differently.

Britain is the ninth biggest manufacturing country on the world stage with nearly 2% global manufacturing output, and so naturally, it has strategic geopolitical importance in its own right. This sector is facing new challenges in the supply chain and as we have seen in past economic downturns, the turbulence can drive a new direction. For the first time in 30 years, British manufacturing can become competitive and take advantage of the weakening pound through reshoring and export goods into the competitive market.

It’s not just me who thinks this, though. Earlier in 2022, a report on building global resilient supply chains by Make UK, the manufacturing trade association, found that 42% of British companies had increased their number of domestic suppliers in the past two years, and many businesses said they intended to make further moves in this direction prior to 2024.

Reshoring – a new direction

For decades now, producers with lower costs due to lower wages and weaker currencies overseas have had an obvious advantage over UK-based peers. But as the economy continues to evolve, many businesses are looking to take advantage of the currency rates by reshoring their business and exporting their goods and service. There are some very good reasons why the UK manufacturing industry will see investments into reshoring strategies:

  1. Cross-border supply chains have become incredibly vulnerable in recent years with the war in Ukraine further exacerbating this. Businesses are now focusing on their fulfilment promises as well as cost, as the leeway customers will give suppliers over late or incomplete orders is not endless. We’re seeing businesses investing more time in their relationships up and down their supply chain as good and open communication on realistic fulfilment expectations becomes a point of differentiation in challenging times.

  2. The 2020s have refocused attention on where countries can be left vulnerable if producers and providers overseas can’t, or won’t, export to the UK. This has affected everything from PPE during the pandemic, to energy and food security, with everything from the telecoms supply chain to the defence supply chain being assessed in a new light. UK manufacturing is being seen as an industry of strategic importance in its own right, and as a driver of growth.

  3. Even taking the first two reasons for reshoring into account, realistically, many consumers and businesses can’t afford to pay two or three times as much for UK-based goods or services compared to cheaper suppliers overseas. Until recently, everything produced locally was underpinned by UK wages, driving up the cost of the product. But with the invasion of Industry 4.0, the adoption of industrial robots, smart factories machine learning and other automation technologies, which has been gathering pace for a few years, efficiencies in the workforce are huge and quality UK products are now increasingly competitive.

Resilience is key

As well as reshoring, businesses may be looking to recalibrate their growth strategies in other areas, to stabilise their own resilience. Studies in the recently published Epicor Industry Insights Report on manufacturing, distribution, building supply, automotive and retail industries revealed that 78% of respondents had changed their core business models in the last year to remain competitive. Of these, 44% diversified by adding new strategies, and 34% pulled back on certain strategies and consolidated their business.

The government followed suit too, recently announcing plans to support the manufacturing economy with an investment of £50million injected into manufacturing to help drive economic growth through the development of fuel switching technology with the aim to reduce the reliance on fossil fuels and energy costs. There are also significant investment plans for new UK facilities in many sectors, including sustainability, automotive, metal additives and recyclable materials.

Along with investment and reshoring focus on the supply chain, the third main area that manufacturers are looking at to help stabilise resilience is in technology. According to the Epicor Insights Report, 86% of businesses changed their technologies by expanding capabilities. And almost all respondents we spoke to believe the right-fit technology will accelerate growth.

Agility will be the key to business robustness and the British manufacturing industry is incredibly resourceful, so being able to react by seizing these opportunities in the current climate could be the turning point to seeing a resurgence in the British economy.

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