Skills and supply chains worry manufacturers

A new survey has shown that optimism over future business prospects among UK manufacturers is being tempered by companies' concerns over accessing the skills they need and by increasing costs of imported raw materials.

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David Sapsted

11 January 2022

The 2022 Senior Executive survey, conducted by the manufacturers' organisation Make UK and PwC, found that three-quarters of companies expected conditions in manufacturing to improve this year.

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UK is open for manufacturing

Additionally, almost two-thirds of the 228 companies in the survey believed that the UK was a competitive location for manufacturing businesses, although a similar proportion regarded leaving the EU as hampering their business.“It is clear from these figures that Brexit and the global Covid-19 pandemic have had a scarring effect on the mentality of many businesses, which are traumatised by the ongoing delays and disruptions to their supply chains,” the report said.The survey found that 56% of companies feared a further impact on their businesses this year from customs delays due to enhanced post-Brexit import checks and changes in product labelling.

Skills and talent risk predominate

Make UK added: "Skills and talent also dominated the risk factors companies were facing with access to labour seen as the biggest risk by almost two-thirds of companies, while almost nine in ten companies were not just worried about losing skills from their business but (from) the sector entirely."Even so, the research found that the majority of manufacturers had successfully weathered the storm caused by the pandemic and Brexit over the past two years with 73% confident prospects would improve in 2022.Stephen Phipson, Chief Executive of Make UK, said: “It’s testament to the strength of manufacturers that they have emerged from the turbulence of the last couple of years in such a relatively strong position."While clouds remain on the horizon in the form of rapidly escalating costs and access to key skills, the outlook is more positive for those that remain adaptable, agile and innovative.“To build on this we now need to see a government fully committed to supporting the sector at home and overseas. This requires more than a Plan for Growth but a broader industrial strategy that sets out a long term vision for the economy and how we are going to achieve consistent economic growth across the whole country.”

Re-shoring, resilience and the net-zero agenda

The survey found that, because of the need to build resilience into business models - as highlighted by the supply chain shortages - 35% of companies were now planning to switch to British suppliers, rather than international ones, with almost a third saying they would re-shore some or more of their production back to the UK.Almost a half of companies were also planning to invest in green technologies or energy efficiency measures in 2022, with a third saying this investment had increased.Cara Haffey, PwC’s UK Industrial Manufacturing and Automotive Leader, said that despite facing an unprecedented combination of continued Covid pressures, cost inflation and supply chain issues, manufacturers were responding with "an impressive amount of agility and resilience".She added: "They have learned valuable lessons about their supply chain vulnerabilities and the resilience needed to respond to unforeseen international or domestic risks, and are strengthening their businesses digitally as well as continuing to focus on talent and skills.“We are particularly pleased by the breadth of net zero ambitions reflected in the report. Across the UK we’re seeing an increasing number of businesses underpin their environmental, social and governance strategies with practical applications to decarbonise their operations and ambitions to build out their green skill base through the recruitment of 'green' jobs."