Make UK’s Q2 2021 Manufacturing Outlook report, in partnership with BDO
Exactly one year on from the publication of Manufacturing Outlook’s worst results in the survey’s history, the mood music has changed dramatically. In what has recently been a dejected patter of quarters for the industry, manufacturers are now finally able to look to the future with earnest confidence. The industry is certainly not without its challenges, both ongoing and new, but the sector has now demonstrated that it can generate growth despite the still perilous circumstance.
While the industry gets back to work at an unprecedented pace, it does so now more keenly aware, and prepared, to mitigate the impacts of the trials that the rest of the year has poised to test it with. These trials, which are by no means mutually exclusive, form the basis for somewhat of a triple-threat to the sustainability of the recovery that is being exhibited within the manufacturing sector in this second quarter.
The first of these antagonising musketeers comes in the form of the novel Trade Cooperation Agreement (TCA) between the UK and the EU. The onus of new protocols and paperwork wreaked havoc for British exporters in the first quarter of the year, reflected in the 40% drop in exports to the EU in January. Since then, businesses have overcome many of the hurdles imposed on them by this new arrangement, with this report detailing significant export improvements compared to the start of the year. Nevertheless, snagging issues continue to emerge with customers and partners in the EU which hamper the speed of trade recovery for the sector.
The second dampener to the industry’s recovery is the ongoing uncertainty generated by unpredictable COVID-19 regulations both here and abroad. While the UK has come leaps and bounds in recent months in terms of the economy reopening, many events critical to the prosperity of UK manufacturing, such as trade shows, struggle to go ahead. This is particularly pronounced in the case of international business travel, where companies and delegates must worry not only about the viability of an event, but also must endure the mercurial travel and quarantine regulations both domestically and abroad.
The third, and perhaps the most prolific of challenges facing the sector lies in supply-chain disruptions. As the international business community enjoys a sudden spike in demand as the economy has sped up faster than expected, so too the strain on these already delicate supply-chains increases. Of course, just prior to this demand spike supply-chains were already significantly stressed owing to COVID-19 related pressures, but now with demand outstripping supply, or rather, the ability to supply in many cases, UK manufacturers are finding that they cannot affordably source inputs for their product, or cannot source inputs at any rate. Supplier delivery lead times are floating at an all-time high, container shipping prices are ballooning, and core inputs are seeing waning availability.
However, despite these obstacles, the manufacturing sector has set off the starting blocks of recovery. The trajectory of which is encouraging, with performance outpacing expectations for the first half of the year. Confidence within the sector is soaring, fuelled by orders and demand across the industry which has been long-missed since the start of the pandemic. Much needed investment expenditure is set to be rendered and employment within the sector looks to expand. The industry is confident that it will be able to overcome the obstacles put before it in the coming year, now equipped with the crisis management ability that it was forced to learn under duress at the inception of the pandemic. It’s with these lessons learned that the sector now has the opportunity before it to build back better, with business resilience and sustainability at its core.
Download the full report – here