There has been much speculation around what 2018 will bring for manufacturers. From the continuation of 2017’s trends to wild guesses. In reality, the people who are best placed to make these predictions are those who know the industry best; you — the manufacturer.
Earlier this year, EEF published the EEF Executive Survey. In it, manufacturers share their expectations for the next 12 months, highlighting what they believe will be their strongest areas of opportunity and the challenges they will face along the way.
Now in its seventh edition, what were this year’s key findings? Having reviewed the survey in detail, here, I present a predicted picture of manufacturing over the coming 12 months.
Global growth, UK fall
Findings from the survey show that manufacturers anticipate global growth of economic conditions — the highest recorded responses since 2014. 3.7% is predicted to be the global growth rate in 2018.
However, while the global view remains positive, UK manufacturers are still feeling the effects of Brexit uncertainty. As we’re no closer to an EU divorce deal, confidence in the UK’s economic outlook for 2018 slipped.
But this isn’t to say that that the UK has a negative outlook for the upcoming 12 months. Rather, it’s quite the opposite. Fuelled by the potential progression of global manufacturing, UK manufacturers are confident that they can grow productivity, sales and employment over the course of the year.
Overall, 22% of companies expect their industry trading conditions to improve this year against last year. This shows a much more positive outlook than the same time last year, when it stood at just 10%.
More risks than opportunities?
While there is a lot of positive reading in the report itself, half of companies said they saw more risks than opportunities for their business in the next 12 months. Just 25% disagreed with this statement.
Many pile the blame on Brexit for this shift in attitudes. However, while Britain’s EU exit will undoubtedly play a part, it’s clear that manufacturers have other concerns on their minds. One of these is capacity.
Following a stronger than anticipated year in 2017 for manufacturing, there is a worry that investment wasn’t where it should have been. Also consider the industry’s pertinent recruitment challenges and it becomes apparent that the inability to meet supply chain demand in light of growing sales is an increasing threat. In fact, half of companies surveyed cited the inability to meet demand as a key threat they expect in the coming months.
We have discussed the Internet of Things at length on our blog, as the industry grapples with emerging technology and artificial intelligence. As more manufacturers embrace the technology, concerns over cyber security have grown; more than 60% of businesses cite cyber-attacks as one of their main risks.
Greater costs for raw materials and factors like the living wage increase were both cited as concerns too, which could have a significant impact on a manufacturer’s bottom line.
Mitigating the risk
Knowing the enemy is half the battle. How do manufacturers plan on mitigating the main risks they face? A huge 86% of companies said they would focus their attentions on process innovation and efficiency improvements in the coming year. This seems an obvious choice when you consider that doing so can foster improved customer relations, support flexibility and grow profitability.
However, manufacturers must consider both their needs now and in the future. Ignoring new technology could essentially lead to reduced productivity realisation and potentially cause increased delays and costs in the future.
In response to capacity concerns, 72% of companies are considering increasing their use of automation within the production process. Investing in the IoT to enable this automation frees up employee time that can be spent on higher-value activities. This means that manufacturers may not have to embark on a major recruitment drive. Essentially, it means they can address their capacity problems internally, rather than searching for high-demand personnel.
Overall, the survey results show a realistic outlook for UK manufacturers. While the risks identified are clear areas of concern, the high level of awareness shows that UK manufacturing refuses to stand still; we’ll seize every opportunity and accept every risk presented to us, doing all we can to emerge stronger on the other side.
If, like the manufacturers surveyed, you’re aiming to drive efficiencies and maximise capacities over the next 12 months, speak to Kerridge Commercial Systems. Our K8 Manufacturing ERP software will help you streamline your processes. Contact us or request a free demo today.