The fifth annual survey Manufacturing Survey by accountancy and business advisory collective MHA was sponsored by Lloyds Bank’s manufacturing team, and looked at the challenges facing over 550 small to medium-sized manufacturers and engineering firms across the UK.
The report found that over two-thirds (69%) of those surveyed are optimistic about their growth in the coming year. Despite this, Brexit issues were cited by more than a third of respondents as a potential barrier for growth.
Over 90% see their production costs rising next year, due largely to an increased cost of raw materials combined with higher wages. Productivity gains are seen as important in bringing down costs, as 71% will not be passing the extra cost down to their customers.
In spite of Brexit, the Eurozone remains the most popular trading partner for British firms, ahead of North America and Asia. Almost two-thirds (65%) of those surveyed trade overseas – a rise of 3% on 2015.
All this points to a sector that is “innovative and resilient despite the uncertainty around the upcoming European Union exit negotiations,” according to MHA’s head of manufacturing, Chris Coopey. However, the skills gap is still an issue. Almost half (47%) of companies are looking to recruit in the next 12 months, but 71% of those raised concerns about the shortage of skilled workers available to them. “Urgently needed is a well thought-through skills strategy to produce a pipeline of educated and motivated candidates into the apprenticeship and further/higher education systems to meet the growing demand,” added Coopey, who also called on the government to provide a “coherent industrial strategy” to meet the shortfall.
“Manufacturing has never been more important to the success and growth of the British economy, and continuing to work closely with firms through this evolving economic landscape will ensure that they maintain their competitive position in domestic and global marketplaces,” said Dave Atkinson, head of manufacturing at Lloyds Bank Commercial Banking (pictured).
