Majority of UK manufacturers say regulatory change is impacting business but are responding by investing in new technologies and Brand Britain.
London, UK — Sage (FTSE: SGE), the market leader in cloud business management solutions, has released its global state of the nation report on process manufacturing, revealing a sector that’s taking charge of its own destiny despite growing change and uncertainty.
As political uncertainty bites, almost two thirds of UK manufacturers (62 per cent) say regulatory changes are affecting their business, with 82 per cent revealing the threat of import-export shake-ups around Brexit having a significant impact on strategic decision making.
Despite those challenges, however, that same number (82 per cent) are confident their UK home-grown industry will be considered a world leader by 2025, and an overwhelming 99 per cent of all process manufacturers who took part in the research in the UK, US and Canada saying they are preparing for growth, suggesting a can-do attitude on both sides of the Atlantic.
“Contrary to prevailing sentiments about the decline of manufacturing in the UK, our research reveals attitudes are anything but downbeat,” said Sabby Gill, Managing Director UK & Ireland, Sage. “With the Fourth Industrial Revolution gathering pace, we see an industry taking the initiative to equip itself with the technologies and skills it needs to succeed. Half of UK manufacturers, for example, say uncertainty around Brexit is making them more likely to invest in technology as they prepare for possible changes.
“In an increasingly digitised world, and with political and economic uncertainty a daily reality, manufacturers that prioritise digital transformation have the best chance of maintaining growth and riding the wave to success,” he added.
The report, entitled ‘Riding the wave of uncertainty: How process manufacturers are planning for a brighter future in 2019’, provides a detailed picture of a sector poised for change in areas of technology, services, skills and, in the UK particularly, where goods and materials are sourced.
The importance of Brand Britain
Driven by uncertainties around importing and exporting, 54 per cent of UK manufacturers said they see a bigger opportunity in providing local sourced goods regardless of price, rather than cheaper items irrespective of origin. This trend towards onshoring is driven not just by the impact home-grown goods can have on the brand and the value customers place on ‘Brand Britain’, but also ties in with concerns around risk, and the importance process manufacturers place on the traceability of raw materials.
Product traceability is seen as more than just a trend. According to Maggie Slowik, Senior Research Analyst, Manufacturing Insights, IDC, who contributed to the report: “As manufacturers move closer to the final customer, their accountability for quality increases as well. This requires the ability to access the complete product history, including handling and production steps.” The research reveals 90 per cent of all participants said they see a lack of traceability as a risk, both to brand value (55 per cent) and, more seriously, to human life (36 per cent where allergens are concerned. Having the right tools and systems in place gives them security in ensuring a healthy brand, customers and profits.
Increasing the bottom line through technology
Long-term, UK process manufacturers’ top priority is enhancing profitability. For the majority (61 per cent), that means investing in technology to drive greater productivity, followed by plans to expand into new markets and improve customer service (56 per cent). The importance placed on technology is also reflected on the factory floor – with the majority (52 per cent) seeing data-driven production as a key trend changing the sector right now, and a similar number (54 per cent) believing that emerging technologies like robotics, IoT and automation will have the greatest impact on their business over the next five years. The research shows the key benefits include reduced operational costs (29 per cent), followed by increased visibility/traceability across the supply chain and enabling automation of repetitive tasks (both 27 per cent).
Closing the skills gap
The sentiment around the importance of technology is also reflected in the skills being sought out – two fifths (39 per cent) believe proficiency in data science and computer science will be critical if UK manufacturing is to remain competitive, compared to advanced critical and creative thinking skills (25 per cent) and proficiency in engineering at just 18 per cent. The report highlights that with the potential knock-on effect of regulatory changes around immigration, many process manufacturers will need to look at changing their recruitment strategies, including finding people from outside traditional talent pools.
Manufacturing professionals from the UK, US and Canada were invited to participate in a research study to gauge their thoughts on the current state of their industry. Questions were asked on a wide range of subjects including business plans and technology adoption, and fielded in American English, British English, and Canadian French. A total of 906 qualified individuals (302 in the UK, 303 in the US and 301 in Canada) completed the questions they were asked. They all had decision making responsibility at mid-sized manufacturing businesses in an IT or business role.
Sage (FTSE: SGE) is the global market leader for technology that helps businesses of all sizes manage everything from money to people – whether they’re a start-up, scale-up or enterprise. We do this through Sage Business Cloud – the one and only business management solution that customers will ever need, comprising Accounting, Financials, Sage Intacct, Enterprise Management, People & Payroll and Payments & Banking.