These are some of the findings from the latest UK Manufacturing Barometer by SWMAS (The South West Manufacturing Advisory Service) in which manufacturing CEOs, directors and managers reveal their future growth and investment priorities.
Whilst firms reported that supply chain price changes (89 per cent) and energy costs (82 per cent) are causing the greatest negative impacts for manufacturing businesses, the number of firms struggling with inflation has reduced by four per cent compared to last quarter's findings.
Manufacturers are taking action to address rising costs by implementing process efficiency improvements (66 per cent) and considering the use of different suppliers (61 per cent). Another 17 per cent of manufacturers plan to bring production back in-house due to rising supply chain costs.
Despite ongoing challenges, the manufacturing industry’s investment plans are optimistic. In total, 52 per cent of respondents are experiencing increased levels of trade compared to their pre-covid position. Furthermore, 44 per cent of manufacturing organisations have experienced an increase in sales turnover in the past six months, with 74 per cent predicting a further increase in sales turnover over the next six months.
In a statement, Nick Golding, managing director of SWMAS, said: “The increased optimism around future sales is positive. However, with firms continuing to invest in inventory to buffer challenges with supply chains, and a third of respondents indicating customer orders are being delayed or starting to be cancelled, companies need support to ensure that planned future investments are not constrained as a result of cash being tied up in inventory which is then affected by order cancellations or delays.”
In terms of talent, 72 per cent of manufacturers agree the lack of suitably skilled staff is still causing a negative impact to business, resulting in a shift in priorities to invest in employee training and upskilling, as reported by 68 per cent of firms.
Golding said: “With increasing calls for an industrial strategy for manufacturing, support for the sector is needed to respond to increasing international competition. With the US launching the inflation Reduction Act and the EU responding with subsidy support for growth sectors such as green technologies, the government needs to support manufacturing to avoid the UK missing out on these huge opportunities for growth. Many SME companies are part of global supply chains, but with the majority of firms focused on the domestic market, it is vital that the UK attracts major investors for these future growth industries to support the wider manufacturing sector.
Golding continued: “The latest figures show that 52 per cent are looking to increase capital investment in the next six months. Previous Barometer surveys have repeatedly highlighted that the number one request for support is a government-backed manufacturing scheme to recognise the industry and help drive this forward. It would be a good start to recognise the investments being made and treat these firms as advanced manufacturers.”
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